The world crude oil prices were weakening in trading at the beginning of the week (15/May). That was occured amid the sharp strengthening of the US Dollar. 

The Brent oil prices moved in the range of $ 73.80 per barrel or weakened by 0.5 percent. Meanwhile, the WTIv weakened by 0.44 percent at $ 69.72 per barrel. 

Overall, oil prices continued to close lower for 4 consecutive weeks. The current condition of this commodity prices is inseparable from the safe haven dollar which jumped up to 0.6 percent for two consecutive days. 

The market is looking for safety amid economic uncertainty and a downturn in the outlook for oil demand from China. In addition, concerns about the US debt ceiling chaos also triggered a sell-off in commodities including oil. 

Hawkish Statement Brings It’s Effect 

Dimming market optimism on the economic outlook has prompted investors to turn to the safe-haven U.S. dollar. This is pressuring global crude demand in the market. 

That was said By John Kilduff, a partner at Again Capital in New York. In addition to benefiting from economic uncertainty, the USD also rallied sharply.

Market participants should thank to hawkish statements by one of the Federal Reserve officials, Michelle Bowman. He said the Fed may need to hike rates again if inflation remains high. 

This situation indicates that the United States central bank is not satisfied with April's inflation data. In fact, the release of the data shows that consumer price pressures have been decreasing.  

Oil Supply Potentially Depleted, Markets Focus on China Data First 

Despite being exposed to some sentiment, oil prices actually received support from a potential supply deficit. That was especially the one in the second half of the year. 

This expectation comes despite Iraq's oil minister, Hayan Abdul-Ghani, not expecting OPEC+ to cut output further at its June 4 meeting in Vienna. This commodity prices were also supported by plans made by the U.S. Energy Secretary Jennifer Granholm.

He signaled to buy back the strategic petroleum reserve (SPR) next month. In the near future, the attention of the oil market will be on the release of some Chinese economic data.

These are consisting of Retail Sales, Industrial Production, and Fixed Asset Investment on Tuesday. Elsewhere, The US dollar index or DXY slipped slightly from its five-week high of 102.75 to the 102.50s.

Debt Ceiling Supports the Greenback

The slipped USD happened in Asian session trading on Monday (May 15). Market participants this week will monitor the progress of political negotiations around the US debt ceiling issue.

That was due to a number of economic data releases and speeches by Fed officials that have a big impact. Analysts cited several factors driving the strengthening of the USD last week. 

Market concerns over the American inflation, global economic growth risks, and the debt ceiling are boosting demand for the greenback. It was one of the most liquid safe-haven assets.

Market data showed that some traders expect the Fed to cut the interest rates by the end of the year, as economic growth slows. However, Fed officials continue to stress it will not cut rates this year. 

A Planned Meeting was Cancelled 

The Federal Reserve hawkish stance contributed positively to the US dollar. In addition, the debt ceiling dispute triggered a fairly high interest in safe haven buying as well. 

The United States is threatened with default on June 1, 2023. That was especially if Congress has not raised the government's debt ceiling by that deadline. 

A planned meeting on the issue was abruptly cancelled on Friday. That is why; negotiations between the American President Joe Biden and US representatives will resume this week.

Despite these factors, many expect the USD to continue to weaken in the months ahead. The reason is that the inflation rate has really begun to weaken and the Fed will not raise interest rates again.