Oil prices fell about 7% to a four-week low on Friday, fears that rising interest rates from major central banks could slow the global economy and reduce energy demand.
In addition, under pressure on prices, the US dollar rose to its highest level since December 2002 against a basket of currencies this week, making oil more expensive for buyers using other currencies.
Brent futures fell $ 8.01, or 6.7 percent, to $ 111.80 a barrel by 14:04 EDT (1804 GMT), while US West Crude Oil Intermediate (WTI) fell $ 9.18. or 7.8%, to $ 108.41.
Brent was on track for its lowest closing since May 18, and WTI for its lowest level since May 12. Brent was on its way to its first weekly five-week decline, and WTI was on its way to its first weekly decline in eight weeks.
There will be no trade in the United States on Monday, the June 10 holiday.
“Crude oil prices fell as the dollar rose, Russia signaled that oil exports should increase as fears of a global recession grew,” said Eduard Moya, a senior market analyst at data and analysis firm OANDA.
Global central bankers, who quickly loosened monetary policy during the pandemic to avoid a recession, are now tightening to fight inflation. The Federal Reserve has raised US interest rates this week for more than a quarter of a century.
“As central banks take significant steps to curb growth by raising interest rates and tightening money, it is emerging here in the oil complex,” said John Kildaff, a partner at Again Capital LLC in New York, noting that the slower economic growth must reduce energy demand.
As the Fed is expected to continue raising interest rates, open interest in WTI futures on the New York Mercantile Exchange fell on Thursday to its lowest level since May 2016 as investors reduced risky assets.
Gasoline and diesel futures in the United States also fell by about 6% due to fears that high pump prices will begin to reduce demand.
The AAA automotive group said the price of diesel at the pump reached a record high of $ 5,798 per gallon on Friday, while the price of gasoline reached a record $ 5,016 earlier in the week.
U.S. energy companies added only four oil rigs this week, while President Joe Biden criticized producers for profiting from incredible prices instead of doing more to increase production. [RIG/U]
Russia, meanwhile, expects its oil exports to increase in 2022, despite Western sanctions and the European embargo, Russia’s deputy energy minister said on Friday, according to TASS.
The global oil market continues to show signs of “turbulence”, said Russian Deputy Prime Minister Alexander Novak, blaming uncertainty over the resumption of oil production in Libya, Iran and Venezuela and a lack of energy infrastructure.
Market turbulence has definitely increased since Russia invaded Ukraine in February. 24.
Russian gas flows to Europe did not meet Friday’s demand as an early heat wave in the south boosted demand for air conditioners.
The European Union’s executive body has recommended that Ukraine and Moldova become candidates for membership in the world’s largest trading bloc.