BP Stock- Oil Majors Fall Amid Strengthening Dollar By Fintech Zoom
By Dhirendra Tripathi
Fintech Zoom – Shares of integrated oil companies as well as standalone refiners and marketers fell Friday as the dollar strengthened and so did crude prices even though other commodities fell.
The dollar Index, which tracks the greenback against a basket of six other currencies, is on course for the largest weekly gain since September.
A rising dollar makes oil more expensive in other currencies, curbing demand.
U.S. Federal Reserves’ hawkish tone on Wednesday on inflation has spooked investors even as the central bank ruled out a rate hike until at least 2023. Conflicting data points and breakdown of traditional thumb rules are also causing investor anxiety.
At 1255 ET, U.S. crude was up 0.9% at $71.67 a barrel, while Brent was up 0.5% at $73.47. On Wednesday, Brent settled at its highest price since April 2019, while WTI settled at its highest since October 2018.
Earlier Friday, OPEC officials received information that indicated U.S. oil output growth will likely remain limited in 2021 despite rising prices, Reuters reported.
Higher oil prices, while being an incentive for all explorers, are of particular significance to U.S. shale gas producers given their cost of production for every barrel is higher and elevated prices make it more attractive for them to extract.
U.S. producers are instead choosing to focus on capital discipline and investor returns, rather than expanding supply, the OPEC’s Economic Commission Board heard, according to a Reuters report.
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