Investing.com — 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 will raise interest rates again in June added to the weight on crude futures that are priced in the U.S. currency. The , 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 settled down $1.37, or 2%, at $68.09 per barrel. The benchmark hit a four-week low of $67.07 during the session.
London-traded settled down 88 cents, or 1.2%, at $72.66. The global benchmark for oil hit a four-week low of $71.53 earlier.
Oil came off its lows as market participants awaited weekly U.S. oil inventory data, due after market settlement from API, or the American Petroleum Institute.
The API will release at approximately 16:30 ET (20:30 GMT) a snapshot of closing balances on , gasoline and distillates for the week ended May 26. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a drop of 1.1 million barrels, versus the 12.5M reduction reported during the week to May 19.
On the front, the consensus is for a draw of 0.369M barrels over the 2.053M barrel decline in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.
With , the expectation is for a drop of 0.118M barrels versus the prior week’s deficit of 0.562M. Distillates are refined into , diesel for trucks, buses, trains and ships and fuel for jets.
Oil prices tumbled after data from Beijing showed that 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 by 500 basis points, or 5%, over the past 16 months, bringing them to a peak of 525 basis points, or 5.25%.