Oil fell on Friday, with traders selling crude to profit after a strong rally this week thanks to growing confidence that the rapid spread of the Omicron strain of the coronavirus will not damage global growth and fuel demand.
The US benchmarks Brent and West Texas Intermediate are heading up more than 6% this week, even with profit taking, in their first weekly increase in seven weeks.And US crude futures fell seven cents, or 0.1%, to $ 70.87 a barrel by 01:50 GMT, after falling 2 percent in a volatile session the previous day.
Brent futures were down 4 cents at $74.38 a barrel, after falling 1.9% on Thursday.
Earlier in the week, the oil market regained about half of the losses incurred since the Omicron outbreak on November 25. But last night’s sell-off came on the heels of credit rating agency Fitch downgrading two Chinese real estate developers, Evergrande and CAISA, saying they had defaulted on overseas bonds.
This has fueled fears of a possible slowdown in China’s real estate sector as well as in the broader economy of the world’s largest oil importer.
In addition, there was some selling after a Japanese study that made headlines showing that the Omicron strain’s transmissibility is more than four times the Delta strain, said OANDA analyst Jeffrey Haley.
The rise of the dollar, ahead of US inflation data to be released later on Friday, also pressured oil prices. Oil usually falls when the dollar rises, which makes crude more expensive for holders of other currencies.
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