Oil tumbles as dollar piles on commodity losses

Oil sank again as the dollar’s surge to a fresh peak and mounting recessionary concerns threatened global demand, deepening a rout.

West Texas Intermediate fell below US$78 a barrel, hitting the lowest intraday level since January, as a Bloomberg gauge of the US currency rallied to an all-time high. US benchmark crude collapsed more than 7 percent last week for a fourth straight weekly drop, the longest losing run this year.

Crude is on track for its first quarterly slump in more than two years as central banks including the Federal Reserve raise interest rates aggressively, hurting the outlook for energy demand and sapping investors’ appetite for risk. 

The Fed’s tightening has helped to drive the US dollar to a record, making commodities priced in the currency more expensive for overseas buyers.

The slump in prices may induce the Organisation of Petroleum Exporting Countries and its allies to consider intervening to stem the slide, either verbally or by announcing a reduction in output. 

Earlier this month, OPEC+ announced a token supply cut, and said members would monitor the market.

The upward pressure on the dollar “is a wrecking ball for commodities,” Gary Ross, the chief executive officer of Black Gold Investors LLC, told a conference in Singapore, flagging scope for OPEC cuts. “The supply-demand balance has caught up and, as we’re entering the fourth quarter, we’re building stocks.” – Bloomberg

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