By Adedapo Adesanya
Crude oil prices fell on Friday as comments from the US central bank officials indicated higher-for-longer interest rates, which could hinder demand from the world’s largest crude consumers.
The price of the Brent crude futures settled at $82.79 per barrel after shedding $1.09 or 1.3 per cent and the US West Texas Intermediate (WTI) crude futures closed at $78.26 a barrel after declining by $1.00 or 1.3 per cent.
For the week, Brent logged a 0.2 per cent loss, while WTI recorded a rise of 0.2 per cent.
Oil prices were pressured as the US dollar strengthened after Dallas Federal Reserve President Lorie Logan said it was unclear whether the policy was tight enough to bring down inflation to the US central bank’s 2 per cent goal.
A strong Dollar makes greenback-denominated commodities more expensive for buyers using other currencies, and higher-for-longer US interest rates could dampen demand.
Higher interest rates typically slow economic activity and weaken oil demand.
Atlanta Federal Reserve President, Mr Raphael Bostic, also told Reuters he thought inflation was likely to slow under the current monetary policy, enabling the central bank to begin reducing its policy rate in 2024 – though perhaps by only a quarter of a percentage point and not until the final months of the year.
Market analysts also noted that prices were under pressure from rising US fuel inventories approaching the typically robust summer driving season.
The market will also keep an eye on inflation data from the US which could influence the central bank’s decisions on interest rates.
Prices drew little support from the US oil rig count, which is an indicator of future supply, despite energy services firm Baker Hughes data showing the oil rigs fell by three to 496 this week, their lowest since November.
Data on Thursday showing China imported more oil in April than the same month last year also helped to keep oil prices from moving lower. China’s exports and imports returned to growth in April after contracting the previous month.
Meanwhile, the European Central Bank (ECB) looks increasingly likely to start cutting rates in June.
Conflict in the Middle East also continues after Israeli forces bombarded areas of the southern Gaza city of Rafah on Thursday, according to Palestinian residents, after a lack of progress in the latest round of negotiations to halt hostilities in Gaza.
In Europe, a Ukrainian drone attack set an oil refinery in Russia’s Kaluga region on fire in what has become a series of attacks between the countries on energy infrastructure.
