Oil headed for a weekly advance as speculation that the Federal Reserve may be close to ending its rate-hiking cycle undermined the dollar just as China continued to leave Covid Zero further behind.
(Bloomberg) — Oil headed for a weekly advance as speculation that the Federal Reserve may be close to ending its rate-hiking cycle undermined the dollar just as China continued to leave Covid Zero further behind.
West Texas Intermediate traded near $70 a barrel after erasing an intraday loss. The US crude benchmark has advanced by more than $3 a barrel this week, while the US currency has lost more than 1%. Oil’s weekly gain follows a significant decline in the prior five-day period as banking crises flared.
Crude remains on course for its steepest first-quarter drop since 2020, when the pandemic eviscerated demand. That slump has been driven by a potential US recession, robust Russian flows despite Western sanctions, and strikes at refineries in France. Still, after the Federal Reserve hiked interest rates again this week, more investors are betting that its tightening campaign is now close to an end, hurting the US currency and aiding dollar-priced commodities.
“In the short term, the oil balance looks quite comfortable and that’s due to Russian supply holding up better than expected,” Warren Patterson, head of commodities strategy for ING Groep NV, told Bloomberg Television on Friday. Still, the global crude market should tighten in the second half as Chinese demand increases, supporting higher prices, he said.
As crude rose this week, serial commodities bull Goldman Sachs Group Inc. again made the case that it will do well this year as part of a broader commodity rally. Oil’s fundamentals and physical-demand indicators are still bullish, it said.
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