Image: Reuters Berita 24 English - Oil prices fell 6% to a four-week low on Friday, owing to concerns that major central banks' interest...
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| Image: Reuters |
Also putting downward pressure on prices, the US dollar surged to its highest level against a basket of currencies this week, making oil more expensive for buyers using foreign currencies.
Brent crude futures sank $6.69, or 5.6 percent, to $113.12 a barrel, while WTI crude in the United States fell $8.03, or 6.8%, to $109.56 a barrel.
Brent closed at its lowest level since May 20 and WTI at its lowest level since May 12. Brent's daily percentage loss was the most since early May, while WTI's was the largest since late March.
Brent futures fell for the first time in five weeks this week, while WTI fell for the first time in eight weeks.
On Monday, Juneteenth, there will be no trading in the United States.
"Crude prices fell as the dollar strengthened, Russia signalled an increase in oil exports, and global recession fears intensified," said Edward Moya, senior market analyst at data and analytics firm OANDA.
Global central bankers, who eased monetary policy fast to avert a recession during the pandemic, are now tightening to combat inflation.
The Federal Reserve raised interest rates in the United States for the first time in more than a quarter-century this week.
"With central banks making significant attempts to constrain growth through interest rate hikes and monetary tightening, it's showing up here in the petroleum complex," said John Kilduff, partner at Again Capital LLC in New York, noting that slower economic development should reduce energy demand.
With the Federal Reserve likely to keep rising rates, open interest in WTI futures on the New York Mercantile Exchange plummeted to its lowest level since May 2016, as investors reduced their exposure to riskier assets.
Gasoline and diesel futures in the United States fell more than 4% on concerns that high pump prices will restrict demand.
According to AAA, the price of diesel at the pump reached a new high of $5.798 per gallon on Friday, while gasoline set a new high of $5.016 earlier in the week.
Only four oil rigs were built this week in the United States, as President Joe Biden chastised producers for benefitting from sky-high prices rather than doing more to raise supply. [RIG/U]
Despite the fact that his administration wants Saudi Arabia to increase oil production, Biden said he will not meet with Saudi Arabia's de facto leader Mohammed bin Salman in a bilateral meeting during his trip to the region next month, and that he will only see the Saudi crown prince as part of a larger "international meeting."
Meanwhile, despite Western sanctions and a European embargo, Russia expects its oil shipments to increase in 2022, according to the Russian deputy energy minister, according to the Tass news agency.
Since Russia invaded Ukraine on February 24, the market's instability has surely risen.
On Friday, Russian gas supplies to Europe fell short of demand as an early heat wave in the south boosted air conditioner demand.
Ukraine and Moldova have been recommended by the European Union's executive body as candidates for membership in the world's largest trading bloc.
An oil ship hired by Italy's Eni SpA will leave Venezuela soon with the first cargo to Europe in two years.
