Oil fell near $70 to mark a fourth straight week of losses as concerns about demand growth persist.
West Texas Intermediate briefly looked set to break its losing streak, supported by signs that Iraqi oil exports are unlikely to resume on Saturday and that the US indicated it could buy crude to fill the strategic reserve after next month. But a strong dollar Friday, which makes oil more expensive for holders of other currencies, erased those gains.
For the week, oil has been pressured by the physical market showing signs of weakness amid poor refining margins and lackluster buying in some areas. The world’s two largest economies showed further evidence of cooling, with US jobless claims rising and China’s recovery faltering. Money managers have piled on short bets on Brent, sending net longs to their lowest level since December.
“The near-term momentum in crude oil futures remains with the bears at least until we see more positive fundamentals from the demand side,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Crude oil has retreated 15% over the past month as bearish sentiment has gripped the market. Traders expect the US economy to be heading into recession and China’s rebound has disappointed some market watchers, putting a question mark over energy demand. On Friday, Citigroup cut its forecast for Brent crude from $84 a barrel to an average of about $82 a barrel this year, with demand continuing to fall short of expectations.
This has so far outpaced the increase in supply cuts announced by the Organization of the Petroleum Exporting Countries and its allies. However, for now, further cuts may not be on the table, Reuters reported, citing an interview with Hayyan Abdul Ghani, Iraq’s oil minister.
Prices have found technical support near $70 and $75 a barrel so far, but a drop below those levels could send oil quickly into the mid-60s, market participants said.
Prices:
- WTI for June delivery fell 83 cents to settle at $70.04 a barrel in New York.
- Brent for July settlement fell 81 cents to settle at $74.17 a barrel.
-With the assistance of Natalia Kniazhevich.
