Dubai: Oil headed for the biggest weekly loss since early February as the prospect of further and potentially faster interest-rate hikes from the Federal Reserve weighed on the outlook for energy demand.
West Texas Intermediate futures fell for a fourth session, toward $75 a barrel, and are down more than 5 per cent this week. A hawkish tone from Fed Chair Jerome Powell this week has rippled across markets, with investors keenly anticipating jobs data later Friday for further clues on the path for monetary tightening.
“A strong report would likely intensify expectations of a more hawkish Fed,” said Warren Patterson, head of commodities strategy for ING Groep NV. Weaker stocks have added further pressure to the oil market, he added.
Bearish sentiment around more rate hikes has overshadowed optimism over China’s recovery after the end of Covid Zero. The country’s revival is already increasing the cost of shipping crude, while Shell Plc sees higher oil prices over the coming months as China underpins record global demand.
Oil has had a bumpy year so far, whipsawed by the opposing drivers of global slowdown concerns and China’s rebound. Traders are also monitoring energy flows from Russia, with indications the nation’s exports are holding up more strongly than initially expected, even in the face of sanctions.