Oil prices went down on Friday to signal the second weekly loss in a row. This decline was due result of a strengthening dollar and confusing lagging from the economy.
Current Price Trends
- Brent Crude: H & R Block decreased by 38 cents, or 0. 5%, at $84. 73 per barrel.
- US West Texas Intermediate (WTI) Crude: Down 50 cents, or 0. 6%, at $82. 32 per barrel.
Brent crude is down 0. 4% – WTI has marginally come down to 0. 2% on Friday.
Influencing Factors
A US dollar index higher for the second day running has imposed a downward pressure on oil prices. This was after better-than-anticipated US labor market and manufacturing figures in the earlier part of the week. Oil becomes costly to investors holding other currencies because the US dollar strengthens and this reduces the consumption rate.
Other factors that led to the decline include China’s performance in the economic arena of the world. It means that the economic growth of the country for this period was 4. , was at 7% in the second quarter, below what most analysts had predicted, and was considered as low oil demand. Specifically, there are no major stimulus measures being initiated by China, which has worse affected the commodity markets.
Supply Concerns and Inflation
They have also somewhat eased the effect of declining oil prices by giving short-term supply concerns. Wildfires that continue to ravage production facilities in the Canadian oil sands are a source of concern because they hold the ability to reduce production rates to a commonly acceptable level.
On the other hand, the core inflation in Japan has a hint of raising interest rates in one of the significant oil-importing countries.
Earlier this week, oil prices got some backing from a more-than-expected decline in US oil inventory. But, other inventory sentiments seem less encouraging, as the crude inventory draw-down rate has tapered, while stocks of gasoline and other fuels have increased across the globe.
OPEC+ Outlook
Moving forward, OPEC+ will remain committed to the existing production strategy whereby some output cuts are set to be gradually eased back from October, insiders believe.