NEW YORK: Oil prices fell by more than $1 a barrel on Tuesday after five days of gains, as comments from US Federal Reserve Chair Jerome Powell stoked rate hike fears, the dollar strengthened and top crude importer China issued weak data.
Brent crude futures shed $1.46, or 1.7 percent, to $84.72 a barrel by 11:06 a.m. EST (1606 GMT). US West Texas Intermediate crude dropped by $1.63 a barrel, or 2 percent, at $78.83.
Prices declined after Powell told Congress the Fed would likely need to increase rates more than expected in light of recent strong economic data.
The remarks pushed up the US dollar, which rose 0.7 percent on the day at 104.97.
A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.
Further pressure came from a contraction in China’s exports and imports in January and February, including crude oil imports, despite a lifting of COVID-19 restrictions.
“Given the high inflation in the US and Europe, demand from there should keep weakening, which also dampens processing demand in China,” said Iris Pang, ING’s chief economist for Greater China.
Declines were limited, however, by supply concerns. Chevron Chief Executive Mike Wirth on Monday told a Houston conference that there is “not a lot of swing capacity,” making the global market vulnerable to any unexpected supply disruption.
“The key unknown for 2023 will be the disruption to Russia’s oil and refined product exports,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
US crude inventories could register their first decrease in 10 weeks, a Reuters poll showed before official data is published this week.