Oil fell 3.4% on Friday, heading for a weekly decline, driven by concerns that further interest rate hikes could weigh on demand and signs of insufficient supply.
Two Fed officials warned Thursday that additional borrowing costs must bring inflation down to desired levels. The dollar got stronger because people expected more rate hikes, making oil more expensive.
Brent crude futures were down $2.56, or 3.4%, at $82.58 a barrel. At the same time, US WTI crude was down $2.34, or 3.4%. It fell to 76.17 dollars.
Both benchmarks are going for weekly declines of more than 4.4%.
Russian oil producers expect to maintain current crude oil export volumes despite government plans to cut output in March. Vedomosti newspaper reported on Friday, citing sources familiar with the company’s plans.
On Wednesday, the US government released a stockpile snapshot. crude inventories rose by 16.34 million barrels to 471.43 million on February 10. This is the highest level since June 2021.
Some support came this week after moves by OPEC to raise forecasts for global oil demand growth this year on expectations of more demand from China.
And Saudi Arabia’s energy minister said the ongoing OPEC+ deal, which brings OPEC producers Russia and others to cut oil production targets by 2.2 million barrels, would be locked in by the end of the year.
European natural gas prices fall
European natural gas prices fell below €50 a megawatt hour for the first time in nearly 18 months.
Euro gas prices had fallen 85 percent from more than 300 euros/MWh in August 2022, when deep supply disruptions to Europe following Russia’s full-scale invasion of Ukraine sparked fears of a possible blackout.
Russian oil is sold at a big discount, and gas prices are low.
Gas prices falling make it less likely that Europe or the UK will have a recession this year. The European Commission says the contraction and government and household spending have boosted the EU’s short-term outlook.
Rising gas prices last year sparked a crisis of living and fueled high inflation as Russia cut off its gas supplies to Europe and cut off most exports in response to Western support for Ukraine.
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