Oil drops 6% to 4-week low on recession fears, strong dollar
Oil prices fell about 6% to a four-week low on Friday on concerns that major central banks’ rate hikes could slow the global economy and cut energy demand.
Also putting pressure on prices, the US dollar this week rose to its highest level since December 2002 against a basket of currencies, making oil more expensive for buyers using the currencies. other currency.
Brent crude futures fell $6.69, or 5.6%, to $113.12 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $8.03, or 6.8%, to 109.56 USD.
That was the lowest close for Brent since May 20 and the lowest for WTI since May 12. It was also the biggest daily percentage drop for Brent since early May. and the largest for WTI since the end of March.
For the week, Brent oil futures fell for the first time in five weeks, while WTI fell for the first time in eight weeks.
There will be no US trading on Monday, June sixteenth holiday.
“Crude oil prices fall as the dollar strengthens, Russia signals oil exports will increase, and as fears of a global recession deepen,” said Edward Moya, senior market analyst at data and analytics firm OANDA. increased demand”.
Global central banks, who were quick to ease monetary policy during the pandemic to avoid a recession, are now tightening to combat inflation.
The Federal Reserve this week raised US interest rates by the most in more than a quarter of a century.
John Kilduff, partner at Again Capital LLC in New York, said: “With central banks taking steps to limit growth through rate hikes and monetary tightening, that is coming here in the region. gasoline complex,” said John Kilduff, partner at Again Capital LLC in New York, noting that slower economic growth should cut energy requirements.
With the Fed expected to continue to raise interest rates, open interest on WTI futures on the New York Mercantile Exchange fell on Thursday, to its lowest level since May 2016 as investors cut risky assets.
U.S. gasoline and diesel futures also fell more than 4% on concerns that high pump prices would dampen demand.
AAA Automotive Group said the price of diesel at the pump hit a record high of $5,798 a gallon on Friday, while gasoline prices hit a record high of $5,016 earlier in the week.
U.S. energy companies added just four oil rigs this week as President Joe Biden criticized producers for profiting from sky-high prices instead of doing more to increase output. [RIG/U]
Even if his administration wants Saudi Arabia to produce more oil, Biden said he will not have a bilateral meeting with Saudi Arabia’s de facto leader Mohammed bin Salman during a trip to the region in September. came and he saw only the crown of Saudi Arabia. prince as part of a broader “international meeting”.
Meanwhile, Russia expects its oil exports to increase in 2022 despite Western and European sanctions, Russia’s deputy energy minister said on Friday, according to Tass news agency. .
Market turmoil has certainly increased since Russia invaded Ukraine on February 24.
Russian gas flows to Europe fell in demand on Friday as an early heatwave in the south boosted demand for air conditioners.
The European Union’s executive body recommends Ukraine and Moldova as candidates for membership of the world’s largest trading bloc.
An oil tanker chartered by Italy’s Eni SpA will soon leave Venezuela with its first shipment in two years to Europe.
