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Oil Gains Capped By Lackluster Industrial Data From China

U.S. West Texas Intermediate crude oil futures are trading lower late in the session on Thursday as traders fear the aggressive rate hiking campaigns by several major central banks will drive down demand by pushing the global economy into recession.

A stronger U.S. Dollar also contributed to the weakness by making the dollar-denominated asset more expensive for foreign buyers. The dollar strengthened on Thursday a day after the U.S. Federal Reserve said it expected interest rates higher for longer. Safe-haven buying tied to a huge sell-off in U.S. equity markets also gave the greenback a lift.

Higher US Dollar Weighs after Fed’s Hawkish Tone

Federal Reserve Chair Jerome Powell on Wednesday said that the U.S. central bank will raise interest rates further next year, even as the economy slips towards a possible recession.

Powell’s hawkish tone helped lift the U.S. Dollar. A stronger greenback can weaken oil demand because it makes the dollar-denominated commodity more expensive for foreign buyers.

Higher interest rates can also push the economy into recession which would lead to lower fuel demand.

Oil Prices Pressured by Weaker Data from China

Overnight, a pair of economic reports from China came in much weaker than expected, further deepening concerns over global demand and recession.

According to Reuters, the world’s second-biggest economy lost more momentum as factory output slowed and retail sales extended…

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