Crude oil prices tumbled on Tuesday amid renewed uncertainty about energy demand, and on the dollar’s rise after Fed Chair Powell said interest rates will likely remain high in order to fight inflation.
The dollar index climbed to 105.57, gaining about 1.2%.
West Texas Intermediate Crude oil futures for April ended lower by $2.88 or about 3.6% at $77.58 a barrel.
Brent crude futures were down $3.12 or about 3.62% at $83.06 a barrel.
Citing stubbornly elevated inflation and stronger than expected economic data, Powell said during his semiannual monetary policy testimony before the Senate Banking Committee that “ultimate level of interest rates is likely to be higher than previously anticipated.”
Powell also said the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.
Additionally, the Fed chief reiterated the central bank will likely need to maintain a restrictive stance of monetary policy for “some time” in order to restore price stability.
Weak economic data from China raised concerns about the outlook for energy demand.
A fall in China’s exports for the January-February period pointed to continued weakness in demand for the country’s products.
China’s exports declined 6.8% in the January to February period from the same period last year, reflecting the challenges posed by the global economy, official data showed today.
However, the annual decrease was slower than the 9.9% drop posted in December and also better than economists’ forecast of 9.4% fall.
Despite re-opening of the economy, imports logged a double-digit decline of 10.2% in the January to February period that was worse than December’s 7.5% decrease and the expected 5.5% fall.
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