Oil Hits 4-Week Lows As Chinese Manufacturing Slides, Dollar Spikes

Oil prices hit four-week lows on Wednesday after weak manufacturing data from China, the world's largest crude importer, raised fears about demand growth in the second half of the year

NEW YORK (UrduPoint News / Sputnik - 31st May, 2023) Oil prices hit four-week lows on Wednesday after weak manufacturing data from China, the world's largest crude importer, raised fears about demand growth in the second half of the year.

The dollar's surge on expectations that the Federal Reserve will raise interest rates again in June added to the weight on crude futures that are priced in the US Currency. The Dollar Index, which tracks six other competing currencies, hit a two-month high, making dollar-priced crudes costlier for those buying them with other currencies.

New York-traded West Texas Intermediate, or WTI, crude was down 98 cents, or 1.4%, at $68.48 per barrel after a four-week low at $67.07.

London-traded Brent crude, the global benchmark for oil, was off 85 cents, or 1.1%, at $72.86. Brent tumbled to a four-week low of $71.

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Data released by Beijing earlier on Wednesday showed that China's manufacturing sector, an important regional growth driver, shrank for a second straight month in May.

This raised concerns of slowing oil demand in the world's second largest economy, which had been expected to be behind much of the previously predicted growth to record highs of oil demand this year following the end of its severe COVID-19 restrictions.

Oil prices are down more than 16% since the start of the year as China's lackluster economic recovery and tighter monetary policy from the Federal Reserve weighed on the demand outlook.

To fight inflation, the Fed has raised interest rates by 500 basis points, or 5%, over the past 16 months, bringing them to a peak of 525 basis points, or 5.25%.