An aerial view of the Phillips 66 oil refinery in the United States.
Tayfun Coskun | Anadolu Agency | Getty Images
Oil prices fell more than 3% on Friday as fears of a global recession and weak demand for oil, particularly in China, outweighed support from a sharp reduction in the oil target. OPEC+ supply.
Brent crude futures fell $2.94, or 3.1%, to $91.63 a barrel, while US West Texas Intermediate (WTI) crude futures fell $3.50, or 3.9%, to $85.61.
Brent and WTI contracts both hovered between positive and negative territory for much of Friday, but fell for the week by 6.4% and 7.6%, respectively.
Core inflation in the United States recorded its largest annual increase in 40 years, reinforcing the view that interest rates will stay higher for longer with the risk of a global recession. The next decision on US interest rates is expected on November 1-2.
US consumer confidence continued to improve steadily in October, but household inflation expectations have deteriorated somewhat, according to a survey.
Improved consumer confidence “is seen as negative because it means the Fed needs to break consumers’ spirits and slow the economy further, and this has caused the dollar to rise and put downward pressure on the market. oil,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
The US dollar index rose about 0.8%. A stronger dollar reduces oil demand by making fuel more expensive for buyers using other currencies.
In the United States, energy companies added eight oil rigs this week to bring the total to 610, their highest level since March 2020, energy services company Baker Hughes Co. said.
China, the world’s largest crude oil importer, is battling COVID-19 surges after a week-long holiday. The country’s infection count is low by global standards, but it adheres to a zero-COVID policy that weighs heavily on economic activity and therefore oil demand.
The International Energy Agency (IEA) on Thursday cut its forecast for oil demand for this year and next, warning of a possible global recession.
The market is still digesting a decision made last week by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, when they announced a cut of 2 million barrels per day ( bpd) oil production targets.
Underproduction within the group means this will likely result in a reduction of 1 million bpd, the IEA estimates.
Saudi Arabia and the United States have clashed over the decision.
Meanwhile, fund managers increased their net long positions in U.S. crude futures and options by 20,215 contracts to 194,780 in the week to Oct. 11, the Commodity Futures Trading Commission said. (CFTC) of the United States.