Oil prices slide below $48 on the strong dollar
Oil prices continued to fall this morning on the stronger dollar, a shock rise in US stockpiles and surging output worldwide.
Brent crude, the global benchmark, slumped 2.5 per cent to $47.7 per barrel today. West Texas Intermediate crude, the US benchmark, slipped 2.2 per cent to $47.1.
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The US Federal Reserve's latest policy meeting reignited expectations for an interest rate hike, helping the dollar index briefly hit a seven week high. The strong dollar makes oil, which is priced in dollars, more expensive to buy using other currencies.
"The stronger US dollar appears to be the key theme in play as the hawkish Fed minutes handed the US dollar back to the USD-bulls," Brenda Kelly, head analyst at London Capital Group, said.
"What is certain is that the stronger US dollar is weighing on oil and commodity prices in general," she added.
Data released yesterday also showed US oil stocks unexpectedly rose by 1.3m barrels last week, taking oil prices firmly off the fresh 2016 high hit earlier this week as oversupply fears returned.
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Elsewhere, surging oil exports from Iran after economic sanctions against it were lifted in January also dragged.
Iran's oil exports are set to jump nearly 60 per cent in May from a year ago to 2.1m barrels per day. This suggests stumbling blocks to post-sanction Iran's return to the market have been overcome or at least less severe than previously thought.