Oil prices are on track to drop 2.5% for the week, as strong US economic data raised fears the Federal Reserve will further tighten monetary policy to tackle inflation.
This session, the price of Brent oil futures delivery fell 96 US cents (equivalent to 1.13%) to 84.18 USD/barrel at 3:04 pm (Vietnam time). US light sweet crude (WTI) futures also fell 97 cents (1.24%) to $77.52 per barrel.
The latest figures show that the US producer price index (PPI) increased by 0.7% in January 2023, following falling 0.2% in December 2022. Meanwhile, jobless claims unexpectedly fell to 194,000, compared with a forecast of 200,000, according to a Archyde.com poll.
Kazuhiko Saito, chief analyst at investment brokerage Fujitomi Securities Co Ltd, said strong US economic data raised concerns regarding the Fed’s continued interest rate hikes. That move would send US Treasury yields up, putting pressure on oil and other commodity prices.
Besides, Tina Teng, an analyst at online trading platform CMC Markets said that US crude oil inventories rose to a 17-month high. This shows that demand is weakening, pushing oil prices lower.
Oil prices had a volatile week amid fears of a recession in the US amid Fed rate hikes to combat inflation, and hopes of a recovery in demand in China, the top oil importer. world.
The International Energy Agency (IEA) this week said China will account for nearly half of oil demand growth in 2023, following it eases COVID-19 containment measures. However, production restrictions by OPEC+ countries – including the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers – might lead to a supply shortage in the second half of this year.
Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ agreement to cut production by 2 million barrels per day will be in effect until the end of the year. At the same time, he added that he remains cautious regarding China’s needs
