NEW YORK (Reuters)

Oil prices fell by more than US$1 a barrel today (March 7) after five days of gains, as comments from US Federal Reserve Chair Jerome Powell stoked rate hike fears, the dollar strengthened and top crude importer China issued weak data.

Brent crude futures shed US$1.46, or 1.7 per cent, to US$84.72 a barrel by 11:06 am EST (1606 GMT). US West Texas Intermediate crude dropped by US$1.63 a barrel, or two per cent, at US$78.83.

Prices declined after Powell told Congress the Fed would likely need to increase rates more than expected in light of recent strong economic data.

The remarks pushed up the US dollar, which rose 0.70 per cent on the day at 104.97.

A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.

Further pressure came from a contraction in China’s exports and imports in January and February, including crude oil imports, despite a lifting of COVID-19 restrictions.

“Given the high inflation in the US and Europe, demand from there should keep weakening, which also dampens processing demand in China,” said Iris Pang, ING’s chief economist for Greater China.

Declines were limited, however, by supply concerns. Chevron Chief Executive Mike Wirth on Monday told a Houston conference that there is “not a lot of swing capacity”, making the global market vulnerable to any unexpected supply disruption.

“The key unknown for 2023 will be the disruption to Russia’s oil and refined product exports,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

US crude inventories could register their first decrease in 10 weeks, a Reuters poll showed before official data is published this week.

The American Petroleum Institute’s weekly report is due at 2130 GMT on Tuesday, with US Energy Information Administration data following at 1530 GMT on Wednesday.