Oil prices hit two-week low on China fears, hawkish Fed outlook
Investing.com-- Oil prices fell to a two-week low in Asian trade on Thursday, extending recent losses as markets fretted over an economic slowdown in China, while strength in the dollar also weighed amid continued signs of a hawkish Federal Reserve.
A bigger-than-expected draw in U.S. inventories largely failed to pull oil prices from a three-day tailspin, as Energy Information Administration (EIA) data also showed that U.S. production came near pre-COVID highs in recent weeks.
This was accompanied by increasing fears of a Chinese demand slowdown, as weak economic indicators from the world’s largest oil importer continued to pile up. The country is also grappling with a brewing real estate crisis.
Hawkish signals from the minutes of the Fed’s July meeting pushed the dollar close to two-month highs, further pressuring crude prices.
Weak trade data from Japan also raised concerns over a global economic slowdown, as the country’s exports, particularly to China, shrank in July.
Brent oil futures fell 0.2% to $83.13 a barrel, while West Texas Intermediate crude futures fell 0.4% to $79.03 a barrel by 21:04 ET (01:04 GMT). Both contracts were at their weakest level in two weeks, and were now down for a fourth consecutive session.
The minutes of the Fed’s late-July meeting showed on Wednesday that nearly all members of the rate-setting committee supported higher interest rates to combat sticky inflation.
The bank had hiked rates to an over 20-year high during the meeting, and had still kept the door open for more hikes if inflation proved to be resilient. Data released last week showed that U.S. inflation rose in July.
The prospect of more rate hikes, or even higher-for-longer interest rates boosted the dollar,
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