Oil Erases Gains As US Dollar Whipsawed By Trump-Powell Saga
Brent traded at $68.38 a barrel, having risen as high as $69 earlier in the day, with a similar pattern for West Texas Intermediate.
Oil was little changed in London, giving up earlier gains after the dollar was whipsawed by speculation over the future of Federal Reserve Chair Jerome Powell.
Brent traded at $68.38 a barrel, having risen as high as $69 earlier in the day, with a similar pattern for West Texas Intermediate. The US dollar moved inversely at around the same time that oil rallied, having been roiled by President Donald Trump’s continuing push for lower interest rates, even though he denied a plan to ax Powell after floating the idea to lawmakers.
“It looks like the dollar,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “It seems market participants are adjusting their Fed concerns a bit.”
Other commodities denominated in the US currency including metals and grains were also trading lower. For oil, the move lower comes despite supply concerns. Stockpiles at Cushing, the key US storage hub, continued to slide, while Kurdistan has lost about 200,000 barrels a day of oil production to due drone attacks on its fields.
In the US, distillate stockpiles remain at the lowest seasonal level since 1996 even after last week’s increase. At the same time, the spread in futures between low-sulfur gasoil and Brent for September — a gauge of the profitability of making diesel — has risen about 7% this month.
In the Middle East, several oil fields in the semi-autonomous Kurdistan region of northern Iraq were attacked by drones on Wednesday, adding to the security risks already faced by energy installations in the area. Still, Kurdistan hasn’t been shipping any crude to global markets since an export pipeline was shut more than two years ago.
