Following last week’s gain, oil prices continued to decline Tuesday for a second straight session due to technical correction, although predictions of plentiful supply and a strong dollar also played a role.
By 0148 GMT, U.S. West Texas Intermediate (WTI) crude dropped 33 cents, or 0.45%, to end at $73.23, while Brent futures dropped 28 cents, or 0.37%, to $76.02 a barrel.
Due in part to hopes of additional fiscal stimulus to boost China’s struggling economy, both benchmarks surged for five consecutive days last week and ended Friday at their best levels since October.
In reference to negative economic news from the United States and Germany, Priyanka Sachdeva, senior market analyst at Phillip Nova, stated, “This week’s weakness is likely due to a technical correction, as traders react to softer economic data globally that undermines the optimism seen earlier.”
Sachdeva added, “The strength of the dollar is also catching up with market sentiment and seems to be trimming the current gains in oil prices.”
Uncertainty over the scope of tariffs from the new Trump administration caused the U.S. dollar to fluctuate, but it stayed near the two-year high it reached last week.
For holders of foreign currencies, oil costs more when the dollar is stronger.
The oil market is anticipated to be well-supplied in the upcoming year due to a combination of sluggish demand from China and rising demand from non-OPEC nations, which has also restrained price increases.
“It looks like the upward trend in crude oil prices is coming to an end,” ING analysts stated in a report.
“The upside should be limited because fundamentals through 2025 are still expected to be comfortable, despite some tightening in the physical market.”
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