Oil futures slid on Wednesday, extending losses from the previous day, as a stronger U.S. dollar prompted fresh selling while data showing a build in U.S. crude stocks and Shanghai`s extended lockdown fuelled fears of slower demand.
Brent crude futures fell 97 cents, or 0.9%, to $105.67 a barrel, while U.S. West Texas Intermediate futures were down 98 cents, or 1.0%, to $100.98 a barrel at 0029 GMT. Brent fell 0.8% on Tuesday and WTI lost 1.3%.
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Higher dollar, an increase in U.S. crude stockpile and concerns over weaker demand in China due to Shanghai`s continued lockdown added to pressure,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Oil prices will likely stay at around $100 a barrel for a while amid demand concerns and an expectation for no conflict in the Middle East during the Muslim fasting month of Ramadan, but they may rise again after Ramadan and as the U.S. driving season kicks off,” he said.
The U.S. dollar hit its highest in nearly two years on Tuesday, boosted by hawkish comments from Federal Reserve officials who pushed for a quick reduction in the central bank`s bloated balance sheet. A stronger dollar makes oil more expensive for holders of other currencies.
U.S. crude and distillate stocks rose last week while gasoline inventories dipped, according to market sources citing American Petroleum Institute figures on Tuesday. [API/S]
Crude stocks rose by 1.1 million barrels for the week ended April 1, against analysts` forecast of a decline of 2.1 million barrels.
Demand worries also mounted after authorities in top oil importer China extended a lockdown in Shanghai to cover all of the financial centre`s 26 million people.
Still, losses were limited as the potential for more sanctions following alleged war crimes by Russian troops in Ukraine raised concerns about supply disruptions.
Ukrainian President Volodomyr Zelenskiy told the United Nations Security Council on Tuesday that Russia must be held accountable for what he and many Western leaders have called war crimes, as the United States and its allies prepared to expand sanctions.
Britain urged G7 and NATO nations on Tuesday to ban Russian ships from their ports, agree a timetable to phase out oil and gas imports from Russia, and further tighten sanctions on banks and key industries.
Meanwhile, member states of the International Energy Agency (IEA) were still discussing how much oil they would together release from storage to cool markets, three sources told Reuters, adding that an announcement was expected in coming days.