Danske Research Team notes that Brent crude has dropped back toward USD 72 and near pre-war levels, with Oil pressured by a stronger US Dollar and growth concerns rather than supply alone. They argue that a hawkish Federal Reserve (Fed) and improving supply outlook have created a bearish backdrop, and sees scope for further Oil price declines as global supplies normalise.

Brent slide driven by USD and supply

"In commodities, Brent crude plummeted yesterday, trading around USD72/bbl. this morning and close to the pre-war levels."

"While much attention in the oil market remains on the supply situation, we think the stronger USD and associated growth worries are behind the drop."

"The hawkish turn by the Fed and rosier supply outlook have created a bearish environment for oil."

"While the USD rally has come a long way, traffic through the Strait of Hormuz remains low."

"Hence, oil prices could potentially fall further as global supplies normalise."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)