Oil Prices Fall for Second Consecutive Week as Dollar Strengthens
In New York, oil prices experienced a decline on Friday, marking a second consecutive week of losses. The strong dollar and mixed economic signals contributed to a downturn in investor sentiment, as reported by Reuters.
Brent crude prices dropped by 38 cents, or 0.5 percent, to $84.73 per barrel by 2:35 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures fell by 50 cents, or 0.6 percent, to $82.32 per barrel.
On a weekly basis, Brent crude saw a 0.3 percent decrease, while WTI was trading slightly higher despite slipping by as much as 0.2 percent on Friday.
Impact of Strong Dollar and China’s Economic Slowdown
The US dollar index rose for the second consecutive session following robust data on the US labor market and manufacturing earlier in the week. A stronger dollar typically leads to reduced demand for dollar-denominated oil from investors holding other currencies.
Additionally, a lack of definitive stimulus measures from China, the world’s top oil importer, has put pressure on commodities, according to analysts at ANZ.
China’s economy grew at a slower-than-expected rate of 4.7 percent in the second quarter, raising concerns about the country’s oil demand.
Market Dynamics and Inventory Trends
Despite these challenges, concerns over supply shortages have helped mitigate losses, particularly with worsening wildfires threatening production in Canadian oil sands, as noted by ANZ analysts.
On the economic front, Japan’s core inflation showed signs of improvement in June, potentially paving the way for an interest rate hike in one of the major oil markets.
While oil prices received some support in recent sessions due to a larger-than-expected decline in US oil stockpiles, consultancy firm FGE highlighted a more bearish outlook on inventory trends. They pointed out that crude stocks are depleting at a slower pace than usual for this time of the year, and global fuel stocks increased last week.
OPEC+ Policy and Production Plans
In related news, the OPEC+ producer group is unlikely to propose any changes to the group’s output policy, including the plan to gradually unwind oil output cuts starting in October. Three sources informed Reuters about this decision on Thursday.