Oil Prices Dip as Strong Dollar Weakens Demand

Oil prices dropped as the Federal Reserve’s outlook for fewer interest-rate cuts in 2025 led to a stronger dollar. 

Brent crude fell to around $73 per barrel, and West Texas Intermediate (WTI) traded at $70. Although the Fed lowered borrowing costs as expected, it reduced the number of rate cuts expected next year, boosting the dollar to its highest level in over 2 years. This made oil and other commodities more expensive for most international buyers.

US Inventories and Global Supply Concerns

Crude prices had risen on Wednesday after a 4th consecutive weekly drop in US oil inventories. However, oil prices have been range-bound since mid-October as traders weigh low demand from China and rising oil production outside OPEC+ countries against geopolitical risks and concerns about potential restrictions on Iranian oil supply.

The current stability suggests that crude futures will experience the smallest price range in a year since 2019, ending the period of large price fluctuations caused by the global pandemic and the wars in Ukraine and the Middle East.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.