Oil prices slid on Friday amid speculations about the US Federal Reserve continuing the tight monetary policy to tackle inflation, which could hit fuel demand even as crude stockpiles grow.
Friday’s price dip indicates oil prices were on track for weekly losses, Reuters reported.
Brent crude futures dropped 49 cents, or 0.6 percent, to $84.65 per barrel by 0105 GMT, while US West Texas Intermediate (WTI) crude futures shed 46 cents, also a 0.6 percent loss, to $78.03.
Both benchmarks were headed for a weekly decline of about 2 percent.
Strong US economic data
Talks of the Fed continuing with its rate cut stance gathered momentum in the wake of the latest US economic data, showing a spike in inflation rate.
Data showed the US producer price index rose 0.7 percent in January, after declining 0.2 percent in December.
US jobless claims, however, fell to 194,000, compared to the 200,000 forecast.
“Strong US data bolstered concerns over rate hikes and prompted a rise in US Treasury yields, which weighed on oil and other commodity prices,” Reuters reported, quoting Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
A build in U.S. crude stockpiles also added to pressure, he said.
The Energy Information Administration (EIA) on Wednesday reported US crude oil stockpiles last week rose to their highest level since June 2021 after a larger-than-expected build.
“Still, the loss was limited as investors expect a recovery in fuel demand in China,” Saito said, predicting the market will continue to stay within a tight range for the time being without a clear direction.
Oil prices have see-sawed over the past weeks between fears of a recession hitting the US amid inflation-fighting rate hikes and hopes for a pick-up in demand in China, the world[s top oil importer.
The International Energy Agency (IEA) said this week that China will make up nearly half of this year’s oil demand growth after it relaxed its Covid-19 curbs, but restrained production by OPEC+ countries – members of the Organization of the Petroleum Exporting Countries and allies – could mean a supply deficit in the second half.
Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal to cut oil production targets by 2 million barrels per day would be locked in until the end of the year, adding he remained cautious on Chinese demand.
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