Oil prices fell more than 1% on Friday as the market balanced supply fears with economic concerns from the US and China. Both benchmarks fell for the fourth week in a row.
Brent crude futures fell 81 cents, or 1.1%, to $74.17, while West Texas Intermediate (WTI) crude futures fell 83 cents, or 1.2%, to $70.04.
Both benchmarks closed about 1.5% lower for the week.
The US dollar held on to modest gains against the euro on Friday and headed for its biggest weekly gain since February as uncertainty over the US debt ceiling and monetary policy led to a shift to safe havens.
A stronger dollar makes dollar-priced oil more expensive than other currencies.
The lack of confidence in the economy translates into a pullback to the safer dollar, while also causing pessimism about oil demand.
Concerns have risen that the United States, the world’s largest oil consumer, will fall into recession, with the US government delaying negotiations on the debt ceiling and growing concern about another crisis-hit regional bank.
Fed Chair Michelle Bowman said on Friday that this month’s data did not convince her that price pressures are receding. The US Federal Reserve will likely need to raise interest rates further if inflation remains high.
Meanwhile, China’s April consumer price data rose more slowly than in March, and deepening factory door deflation broadened doubts about oil demand.
U.S. oil and gas rig counts dropped to the lowest level in nearly a year this week as energy services firm Baker Hughes Co reported its biggest drop in a week since February 2016.
U.S. oil rigs dropped two this week to 586, their lowest since June 2022, while gas rigs fell 16 to 141 last year’s low.
Although OPEC+ is not expected to decide on further production cuts at its next meeting in Vienna on June 4, the market received some support from the supply gap projected for the second half of the year.
An OPEC report released on Thursday said the producer group expects July-December demand for its own crude to be 90,000 barrels per day higher than previously forecast.
The Organization of the Petroleum Exporting Countries (OPEC) kept its global oil demand forecast for 2023 on Thursday, with the expectation that economic risks will be offset by higher demand growth in China.
The market was also supported by the US signaling that it may purchase oil for the Strategic Petroleum Reserve (SPR).