Crude oil prices fell nearly 1% on Friday on concerns that global oil demand growth could be negatively impacted by a strong US dollar and negative economic news from some parts of the world.
Brent futures fell 47 cents, or 0.6%, to settle at $85.24 a barrel, while WTI fell 56 cents, or 0.7%, to settle at $80.73.
The decline pushed WTI out of the technically overbought zone for the first time in four days, while Brent futures remained overbought for the fourth consecutive day for the first time since early April.
For the week overall, both crude oil benchmarks were up about 3%, following last week’s gain of about 4%.
The US dollar rose to a seven-week high against the basket of other currencies; The Fed’s patient approach to lowering interest rates contrasted with more dovish stances elsewhere.
The Fed has aggressively raised interest rates in 2022 and 2023 to rein in the rise in inflation. High interest rates had increased borrowing costs for consumers and businesses; This affected economic growth and oil demand.
A stronger U.S. dollar also reduces demand for oil by making dollar-denominated commodities such as oil more expensive for those who hold other currencies.
Business activity in the United States, the world’s largest oil consumer, rose to a 26-month high in June, driven by a recovery in employment, but price pressures have eased significantly, giving hope that the recent slowdown in inflation will continue.
Meanwhile, existing real estate sales in the U.S. fell for a third straight month in May as record high prices and a resurgence in mortgage rates drove away potential buyers.
Data released Thursday by the U.S. Energy Information Administration (EIA) showed that total supply, which represents oil demand, rose by 1.9 million barrels per day last week to 21.1 million barrels per day.
Despite the decline in crude oil prices, U.S. gasoline futures rose for a fourth day to a one-month high, driven by rising demand and declines in inventories during the summer driving season.
Interim government data showed that refineries in India processed about 1.3% more crude oil in May than a year ago, while the share of Russian supplies in imports to India, the world’s third-largest oil consumer, increased.
Signs of strengthening demand in Asia also boosted sentiment. After the maintenance of oil refineries in the region, some of the idle capacity is coming back.
But business growth slowed sharply this month as demand in the euro zone fell for the first time since February.
Increasing friction between China, the world’s second-largest oil consumer, and the European Union over electric vehicle imports is likely to trigger a trade war.
The Ukrainian military said its drones hit four oil refineries, radar stations, and other military elements in Russia.
The leader of Lebanon’s Hezbollah this week vowed a full-scale conflict with Israel in the event of a cross-border war and also threatened EU member Southern Cyprus for the first time.
In Ecuador, state oil company Petroecuador declared force majeure on crude oil deliveries after an important pipeline and oil wells were closed due to heavy rains