Crude oil prices plunged about 6% to their lowest level in four weeks in the last trade of the week. Sentiment came on concerns that a rate hike by major central banks could slow the global economy and slash energy demand.
Friday (17/6), the price of Brent crude oil for delivery in August 2022 closed down US$ 6.69 or 5.6% to US$ 113.12 per barrel.
Likewise, the price of West Texas Intermediate (WTI) crude oil for delivery in July 2022 closed down by US$ 8.03 or 6.8% to US$ 109.56 per barrel.
It was the lowest close for Brent since May 20 and the lowest for WTI since May 12. It was also the biggest daily percentage drop for Brent since early May and the biggest for WTI since late March.
With this result, Brent futures fell for the first time in five weeks, and WTI fell for the first time in eight weeks.
The correction in crude oil prices also came under pressure from the United States (US) dollar, which this week rose to its highest level since December 2002 against a basket of currencies. This makes oil more expensive for buyers using other currencies.
"Crude prices fell as the dollar strengthened, Russia signaled oil exports should increase, and as fears of a global recession grew," said Edward Moya, senior market analyst at OANDA.
Global central bankers, who quickly eased monetary policy during the pandemic to avoid a recession, are now tightening policies to fight inflation. Just a reminder, this week the Federal Reserve raised US interest rates by 75 bps, the most in more than a quarter of a century.
"With the central bank making fairly substantial moves to limit growth through rate hikes and monetary tightening showing up here in the oil complex," said John Kilduff, partner at Again Capital LLC in New York, noting that slower economic growth would cut demand for the oil. energy.
With the Fed expected to continue raising interest rates, open interest WTI futures on the New York Mercantile Exchange fell on Thursday to their lowest level since May 2016 as investors cut back on riskier assets.
Meanwhile, US gasoline and diesel futures also fell more than 4% on concerns high pump prices will dampen demand.
Car group AAA said diesel prices at gas stations hit a record high of US$ 5,798 a gallon on Friday, while gasoline prices hit a record high of US$ 5,016 earlier this week.
US energy firms this week added just four oil rigs as President Joe Biden lashed out at producers for profiting from sky-high prices instead of doing more to increase output.
Even as the US wants Saudi Arabia to produce more oil, Biden said he would not hold a bilateral meeting with Saudi Arabia's de facto leader Mohammed bin Salman during his trip to the region next month, and that he only sees Saudi Arabia's Crown Prince as part of a "meeting." wider international.
Russia, meanwhile, expects the country's 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 volatility has certainly increased since Russia invaded Ukraine on February 24. Russian gas flows into Europe did not meet demand on Friday as an early heatwave in the south boosted demand for air conditioning.
The EU's executive body has recommended that Ukraine and Moldova become potential members of the world's largest trading bloc.
An oil tanker chartered by Italy's Eni SpA will soon leave Venezuela with its first cargo in two years for Europe.
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