Investing.com — Oil prices fell to a weekly loss after turning sharply lower on Friday, as dollar strength and continued demand concerns from top oil importer China offset continued signs of improving domestic demand.
At 2:30 PM ET (18:30 GMT), fell $2.48 to settle at $80.34 per barrel, and was down 2.7% to $82.80 per barrel
Concerns about Chinese demand and the strength of the dollar weigh amid few stimulus signals
Concerns about sluggish demand at the world’s biggest oil importer remained center stage following weaker-than-expected second-quarter guidance.
The figures came after data last week showed a decline in Chinese oil imports in June.
Weak data on the Chinese economy also came as the Chinese Communist Party’s third plenum, which began earlier this week, provided few indications of plans for more stimulus.
Sentiment toward China was further dented by reports earlier this week that the U.S. was planning tougher trade restrictions on the country’s technology sector, a move that could attract retaliatory measures from Beijing. Speculation about a Donald Trump presidency has further worsened sentiment towards China as Trump has pursued largely protectionist policies.
Trump also said he will push for an increase in U.S. oil production — a move that could herald increased supply in the coming years.
Stronger rates also weighed on oil prices as investors continued to digest the Federal Reserve’s comments ahead of the blackout period that began on Saturday.
Tighter markets and hopes for interest rate cuts provide oil with some support
But expectations of tighter oil markets in the near term provided some support for crude. The US shrank for the third week in a row as demand for travel and fuel increased in the summer months.
The prospect of interest rate cuts by the Federal Reserve has also boosted crude oil as such a scenario provides better conditions for economic growth and oil demand.
Outside the US, ongoing geopolitical conflicts between Hamas and Israel, coupled with Houthi aggression in the Red Sea, caused some risk premia to be priced into oil markets.
“The oil market is again relatively limited,” ING analysts said in a note. “On the upside, growing concerns about Chinese demand are limiting the market, following a set of data earlier this week suggesting a softer demand picture. On the other hand, expectations of a tight market in the third quarter continue to provide a floor for prices .”
On the supply front, meanwhile, the number of drilling rigs fell by one to 477 compared to a week ago, Baker Hughes reported on Friday.
(Peter Nurse, Ambar Warrick contributed to this article.)
