Oil prices dropped on Friday due to a strong dollar, mixed economic signals, and concerns about China’s economy impacting investor sentiment.
Brent crude prices decreased by 41 cents, or 0.5%, to $84.70 a barrel by 0650 GMT. US West Texas Intermediate (WTI) crude futures fell 49 cents, or 0.6%, to $82.33 a barrel.
For the week, Brent was down 0.3%, while WTI saw a slight increase.
The US dollar index rose for the second consecutive session following stronger-than-expected US labor market and manufacturing data earlier in the week.
A stronger dollar reduces demand for dollar-denominated oil from buyers using other currencies. Additionally, the lack of substantial stimulus measures from China, the top oil importer, has negatively impacted commodities, noted ANZ analysts.
China’s economy grew at a slower-than-expected rate of 4.7% in the second quarter, raising concerns about the country’s oil demand. “Concerns over supply in the short term kept the losses minimal,” ANZ stated, referring to worsening wildfires threatening production in Canadian oil sands.
Elsewhere, Japan’s core inflation rose in June, potentially leading to an interest rate hike in the significant oil market.
Oil prices found some support in the previous two sessions after the US government reported a larger-than-expected weekly decline in oil stockpiles.
However, analysts at consultancy firm FGE indicated that broader inventory trends appear more bearish than expected this month. They observed that US crude stocks have decreased at a slower-than-usual pace for this time of the year, while global fuel stocks increased last week.
Meanwhile, the OPEC+ producer group is unlikely to recommend changes to the group’s output policy, including plans to start unwinding one layer of oil output cuts from October, according to three sources who spoke to Reuters on Thursday.
