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Oil Heads for 4th Week of Losses

Oil prices rose slightly on Friday, but are set for a fourth straight week of losses as concerns over headwinds from rising interest rates

Oil Heads for 4th Week of Losses
Yazar: Charles Porter

Yayınlanma: 23 Eylül 2022 14:40

Güncellenme: 29 Mart 2024 04:10

Oil Heads for 4th Week of Losses

Oil prices rose slightly on Friday, but are set for a fourth straight week of losses as concerns over headwinds from rising interest rates outweighed expectations that crude supplies will tighten due to the Russia-Ukraine conflict.

Concerns over rising interest rates around the world, especially after this week's rate hike by the US Federal Reserve, pushed crude oil prices lower as traders feared tighter liquidity conditions and a further drag on economic growth. Still, oil prices pared some of their weekly losses after Russia appeared ready to escalate its invasion of Ukraine, a move that could disrupt oil shipments and tighten global supplies this year. Major Asian importers China and India are buying large volumes of crude from Moscow. Crude oil prices also got some relief as the Bank of England raised interest rates less than expected. London-traded Brent crude futures rose 0.2% to $90.50 a barrel, while US West Texas Intermediate crude futures gained 0.1% to $83.61 a barrel by 20:37 ET (00:37 GMT). Both contracts were set to lose 0.9% and 1.8% this week, respectively. The Fed's more hawkish than expected message on US monetary policy has been the biggest weight on oil prices this week as the central bank warned that it was prepared for risks to economic growth and the labor market in its fight against inflation. Several other European and Asian central banks also tightened monetary policy this week. Tightening monetary policy puts pressure on overall liquidity in the markets, deterring crude oil buyers. High interest rates also have a negative impact on economic activity, reducing demand for crude oil in industrial activities. Consumers also face the double whammy of high inflation and high interest rates, reducing their ability to purchase gasoline. In addition, the US government has also increased the supply of crude oil by drawing from the Strategic Petroleum Reserve, which has pushed prices down in recent weeks. But crude oil prices rose on Thursday after Russian President Vladimir Putin partially mobilized his troops for a new offensive in Ukraine. An escalation of the conflict could tighten supply again, as it did earlier this year. The European Union also accelerated plans to impose price caps on Russian oil, while Nigerian Oil Minister Timipre Marlin Sylva, speaking on behalf of OPEC+, threatened to cut production if oil prices fell further. Traders are now caught between potential demand headwinds from rising interest rates and a possible tightening in supply. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!
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