(Bloomberg) — Oil edged lower on signs of a possible de-escalation of tensions in the Middle East, a surging US dollar, and concerns about demand.
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West Texas Intermediate fell toward $68 a barrel after ending Wednesday modestly higher, with Brent closing above $72. Israel was rushing to prepare a cease-fire deal on Lebanon as the government adjusted to the prospect of Donald Trump’s White House return, according to a Washington Post report.
An additional drag for oil came from a steadily rising US currency, which has rallied to the highest level in two years after Trump’s win. That makes commodities priced in the greenback more costly for most buyers.
Crude has alternated between weekly gains and losses since mid-October, with traders weighing tensions in the Middle East, OPEC+ supply policy, and risks to demand growth, especially in China. There’s widespread concern that the global market will flip to a glut next year, with Morgan Stanley trimming its price forecasts this week citing the softening outlook.
China’s weakening profile in the global oil market was highlighted midweek, with the US Energy Information Administration saying India was now the leading source of demand growth in Asia as Chinese consumption falters due to its economic slowdown and rising electric-vehicle penetration. Further market analysis will come later Thursday from the International Energy Agency.
In the US, meanwhile, the American Petroleum Institute reported that US crude inventories fell by 800,000 barrels last week, with levels at the Cushing, Oklahoma, hub shrinking by a larger 1.9 million barrels, according to a document seen by Bloomberg.
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