Oil prices fell on Friday after US consumer prices rose more than expected and China implemented new COVID-19 lockdown measures.
Norway’s oil production could be cut if workers go on strike on Sunday, the Norwegian Oil and Gas Association (NOG) said.
Oil rose more than $1 at the start of the session on fears of a possible disruption in supply in Europe and Africa.
Brent crude fell $1.06 to $122.01 a barrel. West Texas Intermediate crude fell 84 cents to $120.67 a barrel.
Both indicators posted weekly gains, Brent 1.9% and WTI 1.5%.
Oil prices fell, along with Wall Street stocks, after reports that US consumer prices accelerated in May. Gasoline prices hit a record high and the cost of food soared, leading to the biggest annual increase in nearly 40 years. This raises expectations that the Federal Reserve will tighten policy more aggressively.
The problem is that this may be a forward-looking indicator of consumer habits, and while demand for gasoline is strong at the moment, consumers are likely to turn to economic use if gasoline prices do not stabilize in the future.
Another negative for demand, Shanghai and Beijing returned to COVID alert on Thursday. Parts of Shanghai have imposed new quarantine restrictions, and the city has announced mass testing for millions of residents.
China’s crude oil imports in May increased by about 12% compared to the previous year.
This does not mean that the demand for oil is increasing. China may be seizing the opportunity to supply crude oil from Russia at a price significantly lower than the global market level to replenish its stockpiles.
Sources said that oil production at Libya’s Sarir field has dwindled as the ports of Ras Lanuf and Es Sider were closed and a group threatened to close the port of Hariga.
US drillers are adding oil and gas rigs for the first time in three weeks. The number of US oil rigs, an indicator of future supply, rose by six this week to 580, the highest level since March 2020.
Expectations of reaching a nuclear deal with Iran and lifting US sanctions on Iran’s energy sector are waning.
Money managers cut their net long U.S. crude futures and options positions by 1,674 contracts to 284,171 in the week to June 7, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
