Oil Dips On Strong U.S. Dollar, Possible Slowing Of Demand

Oil prices on Thursday once again dipped, albeit minimally, thanks to a stronger U.S. dollar but also because bearish sentiment was stoked by troubling economic news in that country.

Brent settled down 67 cents at $82.17 per barrel and West Texas Intermediate settled down 53 cents at $75.88 per barrel after Commerce Department data showed that while new orders for U.S. manufactured goods rose broadly in December, orders for industrial equipment and other machinery fell.

John Kilduff, founding partner at Again Capital, mused that, "It was highlighting more slowing in the economy, particularly on the industrial side, which is a negative for petroleum."

Other analysts pointed out that following the Federal Reserve's vow to continue increasing rates, traders were inspired to shun energy and pour money into interest-rate sensitive stocks.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said, "Broadly, commodities have been down as the growth trade gets re-established; the move in rates and Fed posturing has triggered flows out of commodities and energy equities back into growth."

Mitigating Thursday's losses was the European Union ban on refined products from Russia to take effect on Feb. 5, which analysts think could impact global supply; moving forward, they are focused on a Friday meeting of EU countries that are seeking a deal on a European Commission proposal to set price caps on Russian oil products.

The Commission proposed that from Feb. 5 the EU apply a price cap of $100 per barrel on premium Russian oil products and a $45 cap on discounted products.

To date, none of the sanctions seem to be having an effect on the will of Russian president Vladimir Putin, who on Thursday said his forces can't be defeated "on the battlefield," which in turn caused Ukraine president Volodymyr Zelenskiy to state that Moscow's offensive is intensifying and urge allies to "increase global pressure" on the former Soviet Union.

In other oil related news on Thursday, while the crude market is rocky, British oil giant Shell posted  its highest-ever annual profit: adjusted earnings of $39.9 billion for the full-year 2022.

The earnings follow historic annual earnings for U.S. oil majors Exxon Mobil and Chevron, and Wael Sawan, CEO of Shell, remarked, "It is a huge year for Shell and a huge year to look back on as well."