50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Oil prices fall on stronger dollar, demand fears

Published 05/14/2023, 08:33 PM
Updated 05/14/2023, 08:40 PM
© Reuters. FILE PHOTO: An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS
LCO
-
CL
-
NG
-
=EUR
-

By Laura Sanicola

NEW YORK (Reuters) - Oil prices settled more than 1% lower on Friday, falling for the fourth consecutive week, as the market balanced supply fears against renewed economic concerns in the United States and China.

Brent crude futures settled down 81 cents, or 1.1%, to $74.17 while West Texas Intermediate (WTI) U.S. crude futures fell 83 cents, or 1.2%, to $70.04.

Both benchmarks settled about 1.5% lower week on week.

The U.S. dollar clung to modest gains against the euro on Friday and was headed for its biggest weekly gain since February, as uncertainty around the U.S. debt ceiling and monetary policy prompted a shift to safe havens. (=EUR)

A stronger greenback makes dollar-priced oil more expensive for holders of other currencies.

"Lack of confidence in the economy is translating to a retreat to the safer dollar, and is also causing pessimism about oil demand," said John Kilduff, partner at Again Capital LLC in New York.

Concern mounted that the United States - the world's biggest oil consumer - will enter recession, with talks over the U.S. government's debt ceiling postponed and concern growing over another crisis-hit regional bank.

The U.S. Federal Reserve will probably need to raise interest rates further if inflation stays high, Fed Governor Michelle Bowman said on Friday, adding that data this month has not convinced her that price pressures are receding.

Meanwhile, China's April consumer price data rose at a slower pace than in March, missing expectations, while deepening factory gate deflation refocused doubts about its recovery from COVID restrictions driving oil demand growth.

The U.S. oil and natural gas rig count fell this week to its lowest in nearly a year, as gas rigs slumped by the most in a week since February 2016, energy services firm Baker Hughes Co said in its closely followed report on Friday.

U.S. oil rigs fell by two to 586 this week, their lowest since June 2022, while gas rigs plunged by 16 to 141, their lowest April last year.

The market drew some support from the forecast emerging supply deficit for the second half of the year, even as Iraq's oil minister Hayan Abdel-Ghani told Reuters on Friday he does not expect OPEC+ to decide on further production cuts when it next meets in Vienna on June 4.

An OPEC report on Thursday said the producer group expects July-December demand for its own crude to be 90,000 barrels per day (bpd) higher than previously projected.

The Organization of the Petroleum Exporting Countries (OPEC) kept its global oil demand forecast for 2023 unchanged on Thursday, expecting economic risks to be offset by higher Chinese demand growth.

© Reuters. FILE PHOTO: An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS

The market also drew support after U.S. energy secretary Jennifer Granholm signalled that the country could repurchase oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale next month.

(This May 12 story has been corrected to say that oil prices fell for the fourth consecutive week, not third, in paragraph 1)

(Additional reporting Rowena Edwards in London, Yuka Obayashi in Tokyo and Andrew Hayley in Beijing; Editing by David Goodman, Kirsten Donovan, Nick Macfie and Daniel Wallis)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.