By Laila Kearney
NEW YORK (Reuters) -Oil prices fell nearly $1 a barrel on Friday after comments from U.S. central bank officials pointed to higher interest rates for longer, which could hamper demand from the world’s biggest consumers of crude.
futures settled at $82.79 a barrel, down $1.09, or 1.3%. US West Texas Intermediate crude settled at $78.26 per barrel, down $1.00 or 1.3%.
Brent lost 0.2% this week, while WTI rose 0.2%.
Dallas Federal Reserve President Lorie Logan said Friday it is unclear whether monetary policy is tight enough to bring inflation back to the U.S. central bank’s target of 2%.
Higher interest rates tend to slow economic activity and weaken oil demand.
Atlanta Fed President Raphael Bostic also told Reuters he thought inflation was likely to slow under current monetary policy, allowing the central bank to start cutting its key rate in 2024 – albeit perhaps by just a quarter of a percentage point and only in the last months of the crisis. the year.
“The two Fed speakers certainly seemed to ignore the prospect of rate cuts,” said John Kilduff, a partner at Again Capital.
The U.S. dollar strengthened after Fed officials’ comments, making dollar-denominated commodities more expensive for buyers using other currencies. Higher interest rates in the US could also dampen demand.
Oil prices were also under pressure from rising fuel inventories in the U.S. as they approached the usually robust summer driving season, said Jim Ritterbusch of Ritterbusch and Associates.
“Given the price decline over the past month and weaker-than-expected demand trends for U.S. gasoline and diesel, a bearish adjustment in demand appears likely,” Ritterbusch said.
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Next week, US inflation figures could influence the Fed’s decisions on interest rates.
Oil got little support from the number of rigs in the US, an indicator of future supply, despite data from energy services company Baker Hughes showing the number of rigs fell by three this week to 496, the lowest since November. [RIG/U]
Meanwhile, money managers cut their net long futures and options positions by 56,517 contracts to 82,697 in the week to May 7, the US Commodity Futures Trading Commission said.
Data on Thursday showing that China imported more oil in April than in the same month last year also helped keep oil prices from falling. Chinese exports and imports grew again in April after shrinking the month before.
In the meantime, it seems increasingly likely that the European Central Bank will start cutting interest rates in June.
In Europe, a Ukrainian drone strike set fire to an oil refinery in Russia’s Kaluga region, state news agency RIA reported Friday, the latest salvo from Kiev in what has become a series of tit-for-tat attacks on energy infrastructure.
The conflict in the Middle East also continues after Israeli forces bombed areas of the southern Gaza city of Rafah on Thursday, according to Palestinian residents, following a lack of progress in the latest round of negotiations to end hostilities in Gaza.
