Stronger Dollar, Fresh COVID Scare Plunge Oil Prices by 3%

November 15, 2022
crude oil prices

By Adedapo Adesanya

Oil prices plunged by 3 per cent on Monday on the back of a stronger US Dollar and surging coronavirus cases in China.

Brent crude was sold at $93.14 per barrel yesterday after dropping $2.85 or 3 per cent, while the US West Texas Intermediate (WTI) crude traded at $85.87 per barrel after it deflated by $3.09 or 3.47 per cent.

The market’s mood dampened as COVID-19 cases climbed in China over the weekend, with Beijing and other big cities on Monday reporting record infections.

On Friday, the National Health Commission updated its COVID rules in the most significant easing of curbs yet, describing the changes as an optimisation of its measures to soften the impact on people’s lives, even as China sticks to its zero-COVID policy nearly three years into the pandemic.

However, several major cities, including Beijing, logged record infections on Monday, posing a challenge for authorities scrambling to quell outbreaks quickly while trying to minimise the impact on people’s lives and the economy.

Other cities, including Yanji in the northeast and Hefei in the east, said they would stop routine community COVID testing, according to official notices, while in the northern city of Shijiazhuang, some families expressed concerns about exposing their children to the virus at school.

Impact also came as the US Dollar also rose against the Euro and Yen, as investors braced for potential US Federal Reserve interest rates hikes after a policymaker said too much was being made of last week’s cooler US inflation data.

A stronger Dollar makes commodities more expensive for holders of other currencies and tends to weigh on oil and other risk assets.

The Organisation of the Petroleum Exporting Countries (OPEC), meanwhile, cut its forecast for global oil demand growth this year and next, citing economic headwinds.

Meanwhile, Russia will not be able to sell as much oil as it does now once the European Union halts imports without resorting to the capped price or significant discounts from current prices from December 5.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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