Oil prices have remained depressed on high supply and low demand from negative economic factors. Brent has been weakening on concerns over Asian demand, notably from a slowdown in China, while WTI crude was pulling back as improved U.S. data increased bets that the Federal Reserve would hike rates sooner than anticipated. [Commodity ETFs at Multi-Year Lows on Supply Glut]
“It will be a very heavy week in macro data,” Olivier Jakob, managing director at consultants Petromatrix GmbH, said in the Bloomberg article. “China is not a strong story. For financial investors, the Fed moving out of quantitative easing does not call for investment in commodities.”
Moreover, the strong U.S. dollar has also weighed on the commodities market. The U.S. Dollar Index has gained about 7% over the past three months.
“The dollar making some additional gains, oversupplied oil markets,” are the reasons behind oil’s slide today, Ole Sloth Hansen, an analyst at Saxo Bank A/S, said in the Bloomberg article. “Only a dollar sell-off or correction stands in the way of a test of $95 on Brent.”
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