By Noah Browning
LONDON, June 18 (Reuters) – Oil prices fell for a second
straight session on Friday as the U.S. dollar soared on the
prospect of interest rate hikes in the United States, but they
were on track to finish the week little changed and only
slightly off multi-year highs.
Brent crude futures were down 60 cents, or 0.8%, at
$73.68 a barrel as of 1415 GMT. U.S. West Texas Intermediate
(WTI) crude futures were down 95 cents, or 1.3%, at
$71.99 a barrel.
On Wednesday, Brent settled at its highest price since April
2019, while WTI settled at its highest since October 2018.
“Formidable U.S. Dollar strength following the Fed’s hawkish
shift is dominating the oil market heading towards the weekend,”
said Sophie Griffiths, market analyst at OANDA.
“The bullish trend in oil remains intact, thanks to optimism
surrounding the demand outlook. The dollar may well be
strengthening but the fundamental picture for oil hasn’t
changed,” she added.
The dollar has rocketed in the two sessions since the U.S.
Federal Reserve projected possible rate hikes in 2023, earlier
than market watchers previously expected. A rising dollar makes
oil more expensive in other currencies, curbing demand.
The prospect of rate hikes also weighed on the longer-term
growth outlook, which would eventually hurt oil demand, in
contrast to the near-term outlook for growth in demand as
pandemic lockdowns ease and road and air travel pick up, said
Westpac senior economist Justin Smirk.
“The near term’s all very positive. The question is how much
further can it rise”, Smirk said.
Oil prices also fell after Britain on Thursday reported its
biggest daily rise in new cases of COVID-19 since Feb. 19, with
government figures showing 11,007 new infections versus 9,055 a
Adding to negative sentiment were remarks from Iran’s top
negotiator on Thursday saying talks between Tehran and
Washington on reviving the 2015 Iran nuclear deal have come
closer than ever to an agreement.
(Additional reporting by Sonali Paul in Melbourne and Aaron
Sheldrick in Tokyo; Editing by Jason Neely, Mark Potter and