By Oil futures rose early Thursday after a three-day losing streak caused by concerns about demand from China, rising Treasury yields, and a stronger U.S. dollar.
Price Action
- West Texas Intermediate crude for September delivery rose by 65 cents, or 0.8%, to $80.03 a barrel.
- October Brent crude, the global benchmark, was up 71 cents, or 0.9%, at $84.16 a barrel.
Market Drivers
Crude oil is attempting to stabilize after a strong seven-week run that led to a 2023 high. Weak Chinese economic data and concerns about the country’s property sector are affecting demand from the world’s second-largest consumer of crude.
At the same time, hot U.S. economic data has caused Treasury yields to soar, with the 10-year rate reaching its highest level since 2008. As a result, the U.S. dollar has also rallied. A stronger dollar can negatively impact commodities priced in other currencies, making them more expensive for users of those currencies.
Stephen Innes, managing partner at SPI Asset Management, expressed concern about the situation, stating, “Oil traders are getting that sinking feeling as rates and carry pressure builds again as the oil market sniffs out demand fears against the backdrop of the Fed that may have little alternative to turn up the Fed Funds screws to throw a wet blanket over the red-hot U.S. economy.”
The Energy Information Administration will release weekly natural gas storage data on Thursday morning. Analysts expect the data to show a 35-billion cubic foot (Bcf) injection for the week ending August 11.
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