Oil prices fell on Friday and erased the gains of the previous session on concerns that the Federal Reserve (the US central bank) will accelerate plans to raise interest rates to curb inflation.
Brent crude futures fell 70 cents, or 0.8%, to settle at $82.17 a barrel. US West Texas Intermediate crude fell 80 cents, or 1%, to settle at $80.79 a barrel.
The two crudes witnessed a decline for the third week in a row, under pressure from the dollar’s strength, due to speculations that the administration of US President Joe Biden might release quantities of oil from the US strategic stockpile to calm prices. On a weekly basis, the price of Brent crude fell 0.7%, while the US West Texas Intermediate crude fell 0.6%.
“This week has been a good reminder to oil markets that prices are affected not only by the supply and demand curve, but also by monetary policy expectations and forms of government intervention,” said Louise Dixon, senior oil market analyst at Rystad Energy.
“The higher interest rates will provide additional support to the dollar and additional downward pressure on oil prices,” she added.
Although there are positive indicators on the demand side, with a rapid recovery of air travel from the impact of the pandemic, the tightening of monetary policies and the winter that is about to dominate the northern half of the world will act as dampening factors.
On Thursday, OPEC lowered its forecast for global demand for the fourth quarter by 330,000 barrels per day from last month’s forecast, as higher energy prices impeded the course of economic recovery processes from the pandemic.
OPEC and its allies led by Russia (OPEC +) agreed last week to stick to plans to gradually increase production by 400,000 barrels per day each month.
Brent crude futures fell 70 cents, or 0.8%, to settle at $82.17 a barrel. US West Texas Intermediate crude fell 80 cents, or 1%, to settle at $80.79 a barrel.
The two crudes witnessed a decline for the third week in a row, under pressure from the dollar’s strength, due to speculations that the administration of US President Joe Biden might release quantities of oil from the US strategic stockpile to calm prices. On a weekly basis, the price of Brent crude fell 0.7%, while the US West Texas Intermediate crude fell 0.6%.
“This week has been a good reminder to oil markets that prices are affected not only by the supply and demand curve, but also by monetary policy expectations and forms of government intervention,” said Louise Dixon, senior oil market analyst at Rystad Energy.
“The higher interest rates will provide additional support to the dollar and additional downward pressure on oil prices,” she added.
Although there are positive indicators on the demand side, with a rapid recovery of air travel from the impact of the pandemic, the tightening of monetary policies and the winter that is about to dominate the northern half of the world will act as dampening factors.
On Thursday, OPEC lowered its forecast for global demand for the fourth quarter by 330,000 barrels per day from last month’s forecast, as higher energy prices impeded the course of economic recovery processes from the pandemic.
OPEC and its allies led by Russia (OPEC +) agreed last week to stick to plans to gradually increase production by 400,000 barrels per day each month.
(Reuters)
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