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Oil prices fell on Friday, heading for weekly losses, as strong US economic data raised concerns about the Federal Reserve continuing its monetary tightening policy to curb inflation, which could affect fuel demand even as crude inventories grow.
By 0105 GMT, Brent crude futures fell 49 cents, or 0.6 percent, to $84.65 a barrel, while West Texas Intermediate crude futures fell 46 cents, or 0.6 percent, to $78.03. The two benchmarks are heading for a weekly decline of about 2 percent.
Data showed the producer price index in the United States rose 0.7 percent in January, after falling 0.2 percent in December. Meanwhile, claims for unemployment benefits unexpectedly fell to 194,000, versus an expectation of 200,000 in a Reuters poll.
“The strong US data reinforced concerns about raising interest rates and led to an increase in US Treasury yields, which put pressure on oil and other commodity prices,” said Kazuhiko Saito, senior analyst at Fujitomi Securities.
He added that the increase in crude stocks in the United States exacerbated the pressure.
On Wednesday, the Energy Information Administration reported that US crude oil inventories rose last week to the highest level since June 2021, after a larger-than-expected increase.
“However, the loss was limited as investors expect a recovery in fuel demand in China,” Saito said.
The International Energy Agency said this week that China will account for nearly half of global oil demand growth this year after easing restrictions related to Covid-19, but restrictions imposed by OPEC + countries, the group that includes the Organization of the Petroleum Exporting Countries (OPEC) and allies, on production. It could mean a supply deficit in the second half of the year.
Saudi Energy Minister Prince Abdulaziz bin Salman said that the current OPEC+ agreement to cut oil production by two million barrels per day will remain until the end of the year, adding that he remains cautious about Chinese demand.
