Oil prices experienced a decline during European trading on Tuesday, marking the second consecutive session of retracement from a four-month pinnacle, primarily driven by profit-taking activities. The pullback occurred in tandem with the strengthening of the US dollar against its major counterparts.
Market participants are currently in anticipation of pivotal data scheduled for later in the day, encompassing US crude stocks, which are projected to depict a decline for yet another week.
Global Market Dynamics
In the global market, the price of US crude witnessed a notable drop of 3%, reaching $79.97 per barrel. Simultaneously, Brent crude registered a decline of 2.7%, settling at $83.36 per barrel. The session’s zenith for Brent crude stood at $85.74.
A day prior, US crude observed a minor contraction of 0.2%, marking its initial downturn in three days subsequent to attaining a four-month high of $83.26 per barrel. Meanwhile, Brent crude exhibited a marginal decrease of 0.25%, stepping back from its April peak of $86.66.
The Impact of the Dollar
The dollar index demonstrated resilience on Tuesday, advancing by 0.7% and paving the way for a second consecutive session of gains. This upward trajectory brought the index in close proximity to a multi-week zenith against a basket of major currencies.
The impetus for these gains stemmed from optimistic commentary provided by Federal Reserve officials, which in turn reinforced the prospects for an additional US interest rate increase within the current year.
The strength exhibited by the dollar also casts a shadow over other commodities and minerals, rendering them more expensive for individuals holding alternative currencies.
Implications for US Stocks
Later in the day, the American Petroleum Institute is set to unveil data pertaining to US crude stocks. The data release is expected to portray a reduction for the second consecutive week.
Looking ahead, the Energy Information Administration (EIA) is scheduled to release official data concerning US crude stocks tomorrow. This data is anticipated to provide further insights into the prevailing conditions within the energy sector.