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Oil prices slid on Friday as the collapse in bond prices led to gains for the US dollar and expectations have grown that as oil prices return to pre-pandemic levels, more supply will likely find its way into the market.
US West Texas Intermediate crude futures fell 96 cents, or 1.5%, to $62.57 a barrel, giving up all Thursday’s gains.
Brent crude futures for April delivery, which expire on Friday, fell 86 cents, or 1.3%, to $66.02 a barrel, after losing 16 cents on Thursday.
May’s more active contracts fell to a low of $65.04 a barrel earlier, dropping 93 cents, or 1.4%, to $65.18.
She added that the selling in the bond market, which led to the rise of the US dollar and increase in returns, puts pressure on primary commodities that do not yield a return.
The appreciation of the US currency increases the cost of oil priced in dollars to buyers of crude in other currencies.
Despite the drop in prices today, Brent and West Texas Intermediate crude are on their way to achieving gains of about 20% since the beginning of this month, as markets are experiencing turmoil in the United States, while optimism about improved demand increases with the distribution of anti-Coronavirus vaccines.
Investors are betting that a meeting next week of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group is known as OPEC+, will result in the return of more supplies to the market.
US crude prices are also facing adverse factors due to the loss of refinery demand after the closure of several facilities on the coast of the Gulf of Mexico during a winter storm last week.
