The price of oil has hardly changed after falling by almost 2% in the previous two sessions, while price growth is restrained by the positive dynamics of the US currency and expectations of easing geopolitical tensions in the Middle East.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.95% to 104.40 (the highest value since February 16), while the index has increased by 0.93 since the beginning of the week. That’s a headwind for most commodities, and comes even after the Fed signaled lower rates remain on the cards this year.
Meanwhile, reports of a U.N. draft resolution calling for a cease-fire in Gaza also came into focus. U.S. Secretary of State Antony Blinken said he believed talks in Qatar could reach a Gaza cease-fire agreement between Israel and Hamas, easing geopolitical risks in the region. However, Israel has said it will invade Rafah regardless of what the US says, potentially leading to an escalation of regional tensions.
The rise in oil prices was also limited by growing supplies of petroleum products outside OPEC+ and unclear economic prospects for China (the largest importer) amid rising monetary easing expectations after senior PBOC officials hinted at there being further room to reduce bank reserve requirements.
In addition, the gasoline product supplied in the United States - an indicator of demand - fell below 9 million barrels for the first time in three weeks, indicating a possible slowdown in oil demand.