Oil futures fell Tuesday, pulling back from their highs of the month as traders weighed a Libyan supply outage, China’s COVID lockdowns and surging U.S. dollar.
West Texas Intermediate crude for May delivery
fell $4.61, or 4.3%, to $103.60 a barrel on the New York Mercantile Exchange.
June Brent crude
the global benchmark, dropped $4.76, or 4.2%, to $108.40 a barrel on ICE Futures Europe. Front-month contracts for both WTI and Brent ended Monday at their highest for April.
lost 4.2% to $3.237 a gallon and May heating oil
declined by 3% to $3.774 a gallon.
May natural gas
tradeda t $7.161 per million British thermal units, down 8.4% after a 7.1% climb on Monday.
Oil futures fell in Tuesday dealings as the U.S. dollar, as represented by the ICE U.S. Dollar Index
touched its its highest level in two years, pressuring commodity prices, Kansas City energy team analysts from StoneX wrote in a Tuesday newsletter. The U.S. Federal Reserve is “maintaining its hawkish mentality, signaling that the dollar could strengthen more throughout this year,” they said.
Oil was lifted Monday as news reports said two Libyan ports had halted oil loadings as a result of a shutdown of the Sharara oil field, the nation’s largest. The move, came amid heightened worries over supply as a result of Russia’s invasion of Ukraine, with European countries weighing plans for an eventual phaseout of Russian energy imports.
COVID-19 lockdowns in China, meanwhile, have held the market back.
“Clearly, the regional lockdowns that we are seeing have lasted longer than many were anticipating, and so this will have a bigger impact on oil demand in the short term. This weaker demand helps to reduce the tightness that we are currently seeing in the market,” said Warren Patterson, head of commodities strategy at ING, in a note.
Ukraine said Russia has began a new phase of its invasion by launching a full-scale ground offensive to take control of the country’s industrial heartland, the Donbas. The focused attack on the eastern Ukraine region was expected when Russian forces withdrew from the area around the capital Kyiv after being stopped by Ukrainian forces.