THE STAR – Oil prices rose yesterday as the dollar slipped but were headed for hefty weekly losses on expectations there will be no let-up in sharp US interest rate hikes and the prospect of weaker demand from top oil importer China amid rising COVID-19 cases.
Brent crude futures clawed back 67 cents, up 0.8 per cent to USD90.45 a barrel at 0130 GMT, but were not far off a four-week low of USD89.53 hit in the previous session.
US West Texas Intermediate (WTI) crude futures rose 70 cents, or 0.9 per cent, to USD82.34 a barrel, but held near a six-week low.
A slight decline in the dollar helped oil prices yesterday, as a weaker greenback makes oil cheaper for buyers holding other currencies.
However WTI is down more than seven per cent so far this week, while Brent is down nearly six per cent.
Analysts said concerns about potential lockdowns in China to curb a surge in COVID cases, which hit their highest level since April, and worries that more interest rate hikes will drive the US economy into recession cast a pall over the market.
“Oil prices remain under pressure, with demand squeezed by mounting China COVID-19 cases and fears of more aggressive hikes in US interest rates,” said Stephen Innes, managing partner at SPI Asset Management, in a note to clients.
Remarks from US Federal Reserve officials this week dashed hopes of any tempering of aggressive US interest rate hikes.
China reported 25,353 new COVID-19 infections on November 17 up from 23,276 new cases a day earlier, the National Health Commission said yesterday.
“The policy settings in the city of Guangzhou in southern China, where COVID-19 cases have surged significantly, will be important to watch,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.
Recession concerns have dominated this week even with the European Union’s ban on Russian crude looming on December 5 and the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, tightening supply.