Oil prices fell for the second consecutive session on Friday, heading for a more than 3% weekly decline, as a higher-than-expected interest rate hike in the UK and warnings of impending rate hikes in the US ignited concerns about demand.
Brent futures slipped 56 cents or 0.8%, at 0655 GMT to $73.58 a barrel, while West Texas Intermediate (WTI) crude futures were down 60 cents, or 0.9%, at $68.91.
After central banks’ interest rate hikes and a hawkish Fed stance, recession fears are escalating again and the stronger dollar is putting pressure on prices.
The dollar’s rally, which rose 0.3% this week, could depress oil demand, making fuel more expensive for holders of other currencies.
Both crude oil benchmarks fell nearly $3 in the previous session after the Bank of England raised interest rates by half a point, fueling fears of an economic slowdown that dampened fuel demand.
The market now expects Purchasing Managers Indexes (PMIs) from around the world to be released on Friday for a view of manufacturing activity and demand trends.
The Energy Information Administration (EIA) said on Thursday that U.S. crude inventories fell by surprise last week, aided by strong export demand and lower imports. However, gasoline and distillate stocks rose.
Jerome Powell said the central bank would raise interest rates from there “at a cautious pace” as policymakers approached ending the historic round of monetary policy tightening.
Higher interest rates increase borrowing costs for businesses and consumers, which can slow economic growth and reduce oil demand.
Energy traders worry that the Fed and other powerful central banks could cripple economic growth in the second half of the year.
