Oil headed for a weekly decline, with a risk-off mood across markets hampering prices Friday.
(Bloomberg) — Oil headed for a weekly decline, with a risk-off mood across markets hampering prices Friday.
West Texas Intermediate slipped below $77 a barrel, dropping for a fourth day in the longest run of losses since early December. The dollar rose, reducing the appeal of commodities priced in the currency, while equity markets slid.
The US crude benchmark has declined by more than 3% this week, but has undulated in a relatively narrow price band since early December. While global demand may recover in the second half of the year as China recovers after Covid lockdowns, the market isn’t particularly tight in the short term.
The US this week reported a bumper increase in its crude inventories, and traders are watching whether the Federal Reserve will continue raising interest rates to fight inflation.
“Markets are concerned about a 50-basis-point rate hike at the next Fed meeting, supporting the dollar and weighing on oil,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Crude’s relatively limited price action so far this month has pushed market volatility to the lowest levels in more than a year. That move in turn has made it more attractive for producers to lock in their output by hedging, as lower volatility reduces the cost of such trades.
–With assistance from Rob Verdonck.
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