Oil prices down with global inflation uncertainty

Oil prices decreased on Tuesday after recent global macroeconomic data heightened inflation concerns in major economies and dampened demand hopes.

The international oil benchmark of Brent crude fell by 0.55 to 73.12 per barrel at 11.37 a.m. local time (0837 GMT), down from the previous session’s close of $73.53.

The US benchmark West Texas Intermediate also declined by 0.66% to $69.70 per barrel, compared to $70.17 at the close of the prior session.

Both benchmarks fell with ongoing uncertainties surrounding the US Federal Reserve’s (Fed) roadmap for 2025, as well as macroeconomic data pointing to a slowdown in the country’s economic growth.

The manufacturing index announced by the Fed’s New York Branch Monday was below market expectations with 0.2 in December. The country’s manufacturing industry Purchasing Managers Index (PMI) also failed to meet the forecasts, decreasing by 1.4 points monthly to 48.3 in December.

Analysts will closely follow the monetary policy decisions from the Fed and Fed Chairman Jerome Powell’s statements after the meeting on Wednesday.

Also, economic data from China, the world’s largest crude oil importer, increased concerns that oil demand in the country will draw back. Key indicators for November in China showed weak consumer spending.

Analysts stated that recession concerns in the Eurozone continue to affect commodity prices with ongoing weakness, especially in the manufacturing industry, posing a major risk.

On Thursday, the Bank of Japan will announce its interest rate decision, which will give further insight into the bank’s future monetary policy. The bank is expected to continue its stance on tightening monetary policy.

The rise of the US dollar against other currencies also aided the decline in oil prices.

The US dollar index increased by 0.14% to 106.700 on Tuesday at 11.53 a.m. local time (0853 GMT).

The strong dollar is expected to reduce demand by making oil more expensive for foreign currency users.

The dollar index continues to push its highest level recorded in 2 years.

• international oil benchmark of Brent crude
• Oil Prices