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Oil prices recovered somewhat from Thursday’s decline but are still on track to fall on a weekly basis on Friday as markets react to concerns that rising inflation will continue to hit demand.
West Texas Intermediate (WTI) crude oil futures rose 1.13% to $77.74 as of 3:24 p.m. Eastern time, while July Brent crude oil rose to $82.13.
Oil prices were set to record a weekly drop on Friday amid concerns that rising inflation will squeeze demand. (REUTERS/Nicola Groom/File Photo/Reuters Photo)
On Thursday, Brent crude oil closed at its lowest since February 7, while U.S. WTI futures closed at their lowest since February 23.
Brent crude is expected to finish the week down 2.2%, its fourth consecutive trading day of declines this week, its longest consecutive decline since January 2. WTI crude is expected to finish the week down 2.9%.
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“Oil prices are weakening in early Friday trading as concerns over the Federal Reserve’s interest rate policy and last week’s rise in U.S. crude oil inventories continue to weigh on market sentiment,” said independent energy analyst Tim Evans.
A mobile offshore drilling unit stands at Cromartie Firth port in Cromarty, Scotland, Tuesday, June 23, 2020. Oil prices are expected to fall for the week on Friday. (Photographer: Dimas Ardian/Bloomberg via Getty Images/Getty Images)
“Concerns about rising inflation and interest rates dampened most markets on Thursday,” FOX Business contributor Phil Flynn said in Friday’s energy report, noting that “today, believe it or not, markets are getting some pressure from a Reuters report that President Vladimir Putin is calling for a ceasefire in Ukraine.”
Federal Reserve meeting minutes show “willingness” to raise interest rates again
Minutes from the Fed’s latest policy meeting released Wednesday showed policymakers are questioning whether interest rates are high enough to tame persistent inflation, with some officials saying they are prepared to raise borrowing costs again if inflation spikes.
Since then, Fed Chairman Jerome Powell and other policymakers have said they feel further rate hikes are unlikely.
Federal Reserve Chairman Jerome Powell discusses onstage during the Washington Economic Club meeting at the Renaissance Hotel on February 7, 2023 in Washington, DC. (REUTERS/Amanda Andrade Rose/File Photo/Reuters Photo)
Higher interest rates could increase borrowing costs, slow economic activity and dampen demand for oil.
“Macroeconomic trends are failing to provide meaningful support for oil,” said PVM analyst Tamas Varga. “A rate cut is certainly out of reach.”
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Markets are waiting for the OPEC+ producers group, made up of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, to meet online on June 2 to discuss whether to extend voluntary crude production cuts of 2.2 million barrels per day.
Reuters contributed to this report.
