Crude oil prices flew near multi-year highs on Thursday. They were buoyed by declining U.S. crude inventories, limiting the impact of a stronger U.S. dollar.
Brent crude oil futures fell 12 cents, or 0.1%, to $74.27 a barrel by 1332 GMT. They score their highest after April 2019 in the past session.
U.S. crude oil futures were up 3 cents, or 0.04%, at $72.18 a barrel. This comes following reaching their highest after October 2018 the past day.
The U.S. dollar rallied versus a basket of other currencies following the Federal Reserve signaled it might increase interest rates at a much quicker pace than expected.
Stronger dollar affecting demand
A stronger greenback makes oil priced in dollars more costly in other currencies, possibly weighing on demand.
Information from the Energy Information Administration recorded that U.S. crude oil stockpiles in the world’s largest consumer dropped last week as refineries boosted operations to their highest after January 2020, signaling a sustained improvement in demand.
Also supporting prices, refinery throughput in China, the world’s second-largest oil consumer, increased 4.4% in May from the same month a year ago to a record high.
The world’s largest oil traders said this week they noticed oil prices staying over $70 a barrel. Demand is likely to return to pre-pandemic levels in the second half of 2022.
Iran is going to presidential polls on Friday, with hardline judiciary chief Ebrahim Raisi among the front runners.
Tomorrow’s presidential elections in Iran are also likely to lend support to the oil price. Any prompt return of Iranian oil exports is uncertain, Commerzbank (DE: CBKG) stated in a note.
Subsequently, the rise in bond yields and the dollar were a double hit for non-yielding gold, down at $1,810 an ounce after slipping 2.5% overnight.
Oil prices were covered by the prospect of more robust world demand and still tight supply. Brent reached its most distinguished after April 2019 before running into profit-taking and headwinds from the distinctly higher dollar.
Brent was last below 0.3% at $74.15 a barrel, while U.S. crude fell 0.2% to trade at $71.98.