Oil continues its losses due to Chinese growth concerns

On Wednesday, oil prices extended losses for the third day in a row, on the back of the dollar’s rise thanks to the recovery of the US housing market, while demand concerns persisted, fearing that monetary stimulus in China will not be enough to revive growth.

Brent crude futures fell 21 cents, or 0.3 percent, to $75.69 a barrel, and US West Texas Intermediate crude futures fell 14 cents, or 0.2 percent, to $71.06 a barrel by 0043 GMT.

The dollar rose after data showed that home building in the United States rose in May to its highest level in more than a year, and building permits increased, indicating that the housing market may recover after being affected by the Federal Reserve’s interest rate hike.

A strong dollar affects demand for oil because it makes a commodity priced in the greenback more expensive for holders of other currencies.

The market remains concerned about a stalled recovery in China, the world’s largest oil importer. In an effort to boost growth, Beijing on Tuesday cut its main loan interest rate for the first time in 10 months. It cut interest on the one- and five-year loans by 10 basis points, which is lower than expected.

The interest rate cut came on the heels of economic data showing that China’s retail and factory sectors are finding it difficult to maintain the momentum achieved earlier in the year following the abandonment of Corona restrictions.

The oil market is also cautious ahead of Federal Reserve Chairman Jerome Powell’s congressional testimony later on Wednesday, which is expected to provide clues to future interest rate movements in the world’s largest economy.

Dealers are also awaiting US oil inventories data, which will be issued by the American Petroleum Institute on Wednesday and the Energy Information Administration on Thursday. Both reports were delayed by one day after a public holiday on Monday.

Five analysts polled by Reuters estimated that crude stocks fell by about 400,000 barrels in the week ending June 16.