Oil prices retreat from highs; Russian sanctions, US PPI in focus
Oil prices fell Tuesday, pulling back from a four-month high triggered by new US sanctions on Russian oil exports, even as US inflation worries eased.
At 08:45 ET (13:45 GMT), Brent Oil Futures were down 0.9% at $80.32 a barrel, and Crude Oil WTI Futures expiring in March edged 0.8% lower to $76.69 a barrel.
Dollar eases after PPI release
The US dollar edged lower Tuesday after US producer prices rose by less than expected in December, but the greenback still remained near two-year highs, with the Federal Reserve turning more cautious on the prospect of interest rate cuts this year.
The PPI rose just 0.2% on the month in December, data released earlier Tuesday showed, less than the 0.4% gain expected. On an annual basis it climbed 3.3%. below the 3.5% expected, but still a rise from 3.0% the prior month.
The more widely watched consumer prices are due on Wednesday, but the Fed has already projected just two rate cuts in 2025, with officials expressing concern over inflation remaining elevated.
When the greenback appreciates against other currencies, it makes oil more expensive for buyers using other currencies. This reduced affordability often dampens demand in non-dollar-denominated economies, putting downward pressure on global oil prices.
Commodities like oil often attract speculative investment during periods of dollar weakness, leading to price hikes. However, when the dollar strengthens, traders may pivot to safer assets, such as US Treasury bonds, decreasing speculative demand for Crude oil.
Source: Investing.com
