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Oil falls 6% to four-week low due to recession concerns, strong dollar




An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan, November 12, 2021, in this photo taken by Kyodo. Mandatory loan Kyodo / via REUTERS

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  • Brent and WTI mark their first weekly decline in more than a month
  • The US dollar is rising to its highest level since December 2002 at the beginning of the week
  • Central banks are raising interest rates this week to curb inflation
  • Russian natural gas flows to Europe are low on demand

NEW YORK, June 17 (Reuters) – Oil prices fell about 6% to a four-week low on Friday amid concerns that rising interest rates by major central banks could slow the global economy and cut demand. for energy.

Also putting pressure on prices, the US dollar this week rose to its highest level since December 2002 against a basket of currencies, making oil more expensive for buyers using other currencies.

Brent futures fell $ 6.69, or 5.6 percent, to $ 113.12 a barrel, while West Texas Intermediate (WTI) crude fell $ 8.03, or 6.8 percent. , settling at $ 109.56.

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This was the lowest closure for Brent since May 20 and the lowest for WTI since May 12. It was also the biggest daily percentage drop for Brent since the beginning of May and the biggest for WTI since the end of March.

For the week, Brent futures fell for the first time in five weeks, while WTI fell for the first time in eight weeks.

There will be no trade in the US on Monday, the June 11 holiday.

“Crude oil prices fell as the dollar rose, Russia signaled that oil exports should rise and as fears of a global recession grow,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

Global central bankers who quickly eased monetary policy during the pandemic to avert a recession are now tightening to fight inflation. Read more

The Federal Reserve this week raised U.S. rates by the most in more than a quarter of a century. Read more

“With central banks making significant moves to limit growth through rising interest rates and monetary tightening is appearing here in the oil complex,” said John Kilduff, partner at Again Capital LLC in New York, noting that slower economic growth should lower energy. demand.

With the Fed expected to continue raising interest rates, open interest on WTI futures on the New York Mercantile Exchange fell to its lowest level since May 2016 as investors cut risky assets. Read more

Gasoline and oil futures contracts in the US also fell over 4% due to concerns that high pump prices will reduce demand.

Automobile group AAA said the price of oil at the pump hit a record high of $ 5,798 per gallon on Friday, while the price of gasoline reached a record $ 5,016 earlier in the week.

U.S. energy firms added just four oil rigs this week as President Joe Biden criticized manufacturers for taking advantage of high prices instead of doing more to boost output. Read more

Although his administration wants Saudi Arabia to produce more oil, Biden said he would not have a bilateral meeting with Saudi Arabia’s de facto leader Mohammed bin Salman during his trip to the region next month, and that he is saw only the Saudi crown. prince as part of a wider “international meeting”. Read more

Russia, meanwhile, expects its oil exports to increase in 2022, despite Western sanctions and a European embargo, Russia’s deputy energy minister said on Friday, according to the Tass news agency.

Market turmoil has certainly increased since Russia invaded Ukraine on February 24th.

Russian gas flows to Europe fell less than demand on Friday as an early heat wave in the south boosted demand for air conditioning. Read more

The executive body of the European Union recommended that Ukraine and Moldova become candidates for membership in the largest trading bloc in the world. Read more

An oil tanker rented by Italy’s Eni SpA (ENI.MI) will soon depart from Venezuela with the first cargo in two years to Europe. Read more

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Additional reporting by Bozorgmehr Sharafedin in London, Arathy Somasekhar in Houston and Jeslyn Lerh in Singapore; Editing by Marguerita Choy, David Evans, David Gregorio and Leslie Adler

Our standards: Principles of Thomson Reuters Trust.




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