Oil prices fell on Thursday even as weak data from major economies the previous day left investors worried about the demand outlook ahead of a speech by US Federal Reserve Chairman Jerome Powell.

Brent crude fell 18 cents, or 0.2%, to $83.03 a barrel as of 2:08 p.m. EDT (1808 GMT). US West Texas Intermediate crude fell 16 cents, or 0.2%, to $78.73 a barrel. At their session lows, the pair lost more than a dollar in both sessions.

“Disappointing data and jitters that the Federal Reserve could tighten a tighter stance are weighing on oil,” said City Index analyst Fiona Cincotta.

On Wednesday, Japan reported a contraction in factory activity for the third straight month in August. Euro zone business activity also fell more than expected and the UK economy looks set to shrink in the current quarter.

US business activity reached a standstill in August, with the weakest growth since February. But the data also showed that labor market conditions remain tight despite the Fed’s aggressive interest rate hikes.

The economic data has also helped strengthen the US dollar, which has reduced demand for oil by making it more expensive for investors holding other currencies.

“The US is still in a strong position, but there are also areas of weakness and further cracks may appear if interest rates remain high for a prolonged period,” said OANDA analyst Craig Erlam.

“Perhaps this economic skepticism has contributed to the stagnation we’ve seen and may even have triggered a recovery,” Erlam said.

Federal Reserve officials and other global central bankers were on their way to Jackson Hole, where Powell will address the symposium on Friday. Investor caution lifted the safe-haven dollar on the eve of his remarks. An appreciation of the dollar makes oil more expensive for holders of other currencies, reducing demand.

On the supply side, Iran’s crude output will reach 3.4 million barrels per day (bpd) by the end of September, the country’s oil minister was quoted as saying by state media, even though US sanctions remain in place.

According to sources, US officials are also drafting a proposal that would ease sanctions on Venezuela, allowing the South American nation to export more oil as it moves towards free and fair presidential elections.

A bigger-than-expected drop in US crude inventories helped limit losses in oil benchmarks.

US crude inventories fell by 6.1 million barrels in the week to August 18, compared with analysts’ expectations for a drop of 2.8 million barrels in a Reuters poll.

Meanwhile, Saudi Arabia is expected to extend its 1 million bpd voluntary production cut in October to support the market.

(Reporting by Shariq Khan; Additional reporting by Ahmed Ghadar and Mohi Narain; Editing by Kim Coghill, David Evans, David Gregorio and Deepa Babington)

(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content was auto-generated from a syndicated feed.)

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