Oil slumped 6% to a four-week low amid interest rate hikes, recession concerns and strong dollar
Central banks raised interest rates this week to curb inflation. The Federal Reserve increased US rates this week at the highest rate in more than a quarter of a century. Oil prices fell nearly 6% to a four-week low on Friday, amid concerns that interest rate hikes by major central banks could slow the global economy and curb energy demand.
Also, pressing prices, the US dollar rose to its highest level since December 2002 against a currency basket this week, making oil more expensive for buyers of other currencies.
Brent futures fell $6.69, or 5.6%, to $113.12 a barrel, while West Texas Intermediate (WTI) crude fell $8.03 or 6.8% to $109.56 a barrel.
This was the lowest close since May 20 for Brent and the lowest since May 12 for WTI. It was also the biggest daily percentage drop for Brent since early May and the biggest percentage drop for WTI since late March.
During the week, Brent futures fell for the first time in five weeks, while WTI fell for the first time in eight weeks.
There will be no US trading on Monday due to the Juneteenth holiday.
As the dollar rose, Russia signaled that its oil exports should increase, and crude oil prices fell as fears of a global recession rose.
Central banks are making very important moves to limit growth through interest rate hikes, and monetary tightening occurs in the oil complex. Global central bankers, who quickly loosened monetary policy to avoid a recession during the COVID-19 pandemic, are now tightening it to fight inflation.
While the Fed is expected to continue raising interest rates, the open rate on WTI futures on the New York Mercantile Exchange fell to its lowest level since May 2016 on Thursday as investors turned away from risky assets.
U.S. gasoline and diesel futures also fell more than 4% on concerns that higher pump prices will dampen demand.
Automobile group AAA said the price of diesel at the pump hit a record $5,798 per gallon on Friday, while the price of gasoline hit a record $5,016 earlier in the week.
US energy companies added just four oil rigs this week, while Biden accuses manufacturers of profiting from too high prices instead of doing more to increase production.
Russia expects oil exports to increase in 2022, despite Western sanctions and a European embargo, Russia's Deputy Energy Minister said on Friday.
Turbulence in the market has definitely increased since Russia invaded Ukraine on February 24.
Russia's gas flow to Europe fell short of demand on Friday as demand for air conditioning increased.
The executive body of the European Union recommended that Ukraine and Moldova be candidates for membership in the world's largest trade bloc.
An oil tanker chartered by Italian Eni SpA will soon leave Venezuela with the first cargo to Europe in two years.
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