You are here: Home » International » News » Others
Business Standard

Oil prices on track for weekly dip as dollar continues to gain

US West Texas Intermediate crude futures fell 61 cents, or 0.8%, to $80.98 a barrel at 0749 GMT, reversing Thursday's 25 cent gain

Crude Oil | Crude Oil Price

Reuters  |  SINGAPORE 

oil prices

By Sonali Paul and Koustav Samanta

SINGAPORE (Reuters) -Oil prices fell on Friday, wiping out gains from the previous session, as the dollar continued to gain on bets the U.S. central bank will bring forward plans to raise rates to tame inflation.

U.S. West Texas Intermediate (WTI) crude futures fell 61 cents, or 0.8%, to $80.98 a barrel at 0749 GMT, reversing Thursday's 25 cent gain.

Brent crude futures dropped 65 cents, or 0.8%, to $82.22 a barrel.

"The greenback may hold its strength until the expectation of a more hawkish Fed is fully digested by the market, which may not be sooner than mid-2022. Before that happens, a strong dollar can be a possible headwind for higher oil prices," said Leona Liu, analyst at Singapore-based DailyFX.

Both benchmark crude contracts were poised to end the week lower after sharp moves up and down, driven by a soaring dollar and speculation on whether the Biden administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices.

"The market is in a finely balanced situation," said Westpac senior economist Justin Smirk.

While the market is tightly supplied, he said the bigger issue is the change in the demand dynamic, as the market moves away from a strong recovery driven by a revival in demand for goods - which has stoked energy demand - toward a recovery in demand for services.

There are positive signs on the demand side, with air travel rapidly picking up, but tighter monetary and fiscal policy and the oncoming northern hemisphere winter will act as a dampener.

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day from last month's forecast, as high energy prices curb the recovery from COVID-19.

"Although oil price may benefit from the recovering demands, soaring energy prices and a more sticky inflation may damp the growth prospects, thus to curb oil's topside potential," analyst Liu said.

OPEC, Russia and allies, together called OPEC+, agreed last week to stick to plans to add 400,000 barrels per day to the market each month.

(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Richard Pullin and Michael Perry)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, November 12 2021. 15:05 IST