Oil down on demand fears heading for sharp weekly losses

Oil trimmed early gains as it headed for a sharp weekly decline due to concerns about weak demand in China and further interest rate increases by the Federal Reserve (the US central bank).

By 0737 GMT, Brent crude futures fell 13 cents, or 0.1%, to $89.65 a barrel, but it was not far from its lowest level in four weeks, which it reached in the previous session at $ 89.53 a barrel.

According to “Reuters”, while West Texas Intermediate crude futures increased 13 cents, or 0.2 percent, to $ 81.77 a barrel, but it held near its lowest level in six weeks. WTI is down 8 percent so far this week, while Brent crude is down more than 6%.

The dollar’s decline supported oil prices on Friday, given that the decline in the US currency makes oil less expensive for holders of other currencies

Analysts said that concerns about a possible closure in China to curb the increase in Covid-19 infections, which reached their highest levels since April, and fears of further hikes in interest rates that could push the US economy towards recession, cast a shadow over the market.

Comments from Federal Reserve officials this week and stronger-than-expected retail sales data dashed hopes of an easing of monetary tightening related to raising interest rates in the United States.

According to Reuters poll, the Fed is expected to raise interest rates by 50 basis points in December after four consecutive increases of 75 basis points.

Recession fears prevailed this week, despite the imminent implementation of the European Union embargo on Russian crude oil on December 5, and the OPEC + group, which includes OPEC and independent producers, reduced supplies.