Oil prices are on track for weekly losses as strong US economic data raises concerns that the Federal Reserve will tighten monetary policy further to fight inflation. This situation may hit fuel demand during this period when crude oil stocks increase.
Brent crude futures fell 64 cents, or 0.75%, to $84.50 a barrel as of 03:34 GMT on Friday, while West Texas Intermediate (WTI) crude futures fell 59 cents to $84.50, down 0.75%. Both benchmarks are headed for more than 2% weekly declines.
The data showed that the US producer price index (PPI) rose 0.7% in January after falling 0.2% in December. Meanwhile, unemployment claims unexpectedly fell to 194,000, compared to an estimate of 200,000, according to a survey.
Strong US data raised concerns about rate hikes and led to an increase in US Treasury bond yields, which weighed on oil and other commodity prices.
The rise in US crude inventories to a 17-month high indicates weakening demand, which has caused prices to fall.
Crude oil prices also fell after the PPI data, driven by risk aversion, a sell-off on Wall Street, and a strong US dollar.
Oil prices have oscillated in recent weeks between interest rate hikes to fight inflation, fears of a recession hitting the US, and hopes of a recovery in demand in China, the world’s largest oil importer.
The International Energy Agency (IEA) said this week that it will account for about half of this year’s oil demand growth after China loosens COVID-19 restrictions, but OPEC+ countries will curb production. This could mean a supply gap in the second half of the year.
Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal to reduce oil production targets by 2 million barrels per day will be locked by the end of the year, adding that he remains cautious about China’s demand.
