Investing.com– Oil prices fell in Asian trade on Tuesday as a rebound in the dollar weighed, while weaker-than-expected trade data from China also raised concerns over sluggish demand in the world’s largest oil importer.
Crude prices had risen slightly from multi-month lows on Monday, encouraged by commitments from Saudi Arabia and Russia to maintain their ongoing supply reductions until the end of the year.
The U.S. also announced plans to buy three million more barrels of oil to refill the Strategic Petroleum Reserve, indicating more tightness in global supplies.
But this was largely offset by a rebound in the , while traders also continued to price in a smaller risk premium from the Israel-Hamas war. Uncertainty over crude demand also weighed, especially ahead of key readings on Chinese oil imports.
Weak economic readings from the euro zone and UK also raised concerns that slowing economic growth will weigh on oil demand.
fell 0.4% to $84.83 a barrel, while fell 0.4% to $80.52 a barrel by 22:22 ET (03:22 GMT).
Both contracts were nursing steep losses over the past week, amid growing bets that the Israel-Hamas war will not disrupt Middle Eastern supplies.
China trade data disappoints, but imports strong
Data on Tuesday showed that China’s shrank more than expected in October, while the country’s was at its worst level in 17 months.
But unexpectedly grew during the month, highlighting some improvement in local demand as Beijing rolled out more stimulus measures.
Still, the prolonged weakness in exports signaled more headwinds for China’s biggest economic engines, which in turn could stymie growth in the country and dent oil demand.
Chinese fuel consumption has remained largely languid this year, and export-oriented refineries have accounted for a bulk of the country’s crude demand. But the government recently introduced new output caps on fuel refiners to curb their carbon footprint.
China was also seen steadily building its oil stockpiles with cheap Russia crude this year, which could see the country winding down imports in the coming months.
Dollar rebounds as Kashkari downplays Fed pause bets
The rose from a six-week low, as overnight comments from some Federal Reserve officials suggested that market expectations for a pause in the central bank’s rate hike cycle may be premature.
Minneapolis Fed President Neel Kashkari warned that the central bank may not be done raising interest rates, given that inflation has remained sticky in recent months. While he acknowledged some resilience in the U.S. economy, he also noted that the Fed had more work to do regarding inflation.
Kashkari’s comments somewhat dented expectations that the Fed was done raising interest rates- bets on which had triggered sharp rally in financial markets over the past four sessions.
His comments also spurred a rebound in the dollar, which in turn weighed on oil prices. More Fed officials are also set to speak later in the day.
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