© Reuters.
Investing.com– Oil prices inched lower in Asian trade on Friday, and were headed for a third straight week of steep losses as persistent concerns over slowing demand and resurgent fears of rising U.S. interest rates battered crude markets.
Crude prices saw a series of steep losses this week, following a string of disappointing economic readings from top importer China, as well as the euro zone.
Hawkish signals from Federal Reserve officials also weighed, especially as the dollar rebounded on renewed expectations of U.S. interest rates remaining higher for longer. Fed Chair Jerome Powell reiterated this outlook when speaking on Thursday, and also warned that rates had more room to rise.
Signs of global economic weakness, coupled with the prospect of higher U.S. rates, raised concerns over just how strong oil demand will remain in the coming months. This was also accompanied by data showing a massive weekly jump in , as domestic production ramped up.
fell 0.1% to $79.85 a barrel, while sank 0.3% to $75.53 a barrel by 20:11 ET (01:11 GMT).
Oil heads for third week in red, prices near 4-mth lows
Brent and WTI futures were both trading near their weakest levels since late-July, and were set to lose between 5.8% and 6.3% this week- their third straight week of losses.
Crude markets were on a selling spree as diminished concerns over the Israel-Hamas war saw traders pricing in a smaller risk premium from the conflict, which did not appear to be disrupting oil supply from the Middle East.
Adding to the pressure were weak economic signals from China, with recent data showing that the country re-entered disinflation territory in October, as business activity contracted and exports continued to plummet.
Signs of increased U.S. and Iranian crude production also indicated that oil markets may not be as tight as initially expected, even as major producers Russia and Saudi Arabia signaled that they will maintain their supply cuts until the end of the year.
Saudi Energy Minister Prince Abdulaziz bin Salman said on Thursday that oil demand was not weakening, and that speculators were behind the commodity’s recent price decline.
Dollar rebound weighs on crude after Powell comments
A rebound in the dollar also dented crude markets, especially as warned that interest rates could still rise further as the central bank moves against inflation.
The rebounded sharply from six-week lows this week, given that Powell’s comments were preceded by similar, hawkish signals from a string of other Fed officials.
This saw markets reassess their expectations that the Fed was done hiking rates, and also spurred bets that rates will .
Such a scenario is expected to pressure global crude demand, especially as monetary conditions in most major economies remain tight.
