Oil futures fell Friday and were on track for weekly declines after a flurry of central bank interest rate increases around the world this week heightened fears of a sharp economic slowdown.
Price action
-
West Texas Intermediate crude for August delivery
CL00,
-1.77% CLQ23,
-1.77%
fell $1.07, or 1.5%, to $68.44 a barrel on the New York Mercantile Exchange, putting the U.S. benchmark on track for a 4.8% weekly fall. -
August Brent crude
BRNQ23,
-1.61% ,
the global benchmark, was down 90 cents, or 1.2%, at $73.24 a barrel on ICE Futures Europe, down 4.4% for the week. -
Back on Nymex, July gasoline
RBN23,
-1.69%
dropped 1.1% to $2.523 a gallon, while July heating oil
HON23,
-2.58%
dropped 1.4% to $2.432 a gallon. Gasoline was headed for a 5.9% weekly tumble, with heating oil off 4.7%. -
July natural gas
NGN23,
-1.07%
rose 0.5% to $2.621 per million British thermal units, leaving it down 0.4% for the week.
Market drivers
WTI futures have dropped below $70 a barrel four times this year with increasing frequency, but each time technical support between $67 and $69 a barrel has held, noted analysts at Sevens Report Research, in a Friday note. Each subsequent bounce in prices has run out of steam at a lower price point.
“This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish,” they wrote.
Crude prices dropped sharply Thursday after the Bank of England and Norway’s central bank each raised interest rates by half a percentage point, while the Swiss National Bank delivered a quarter percentage point increase. Federal Reserve Chair Jerome Powell, in a second day of congressional testimony, reiterated expectations by policy makers for two more rate increases after the central bank left rates unchanged last week.
See: Global growth outlook deteriorates on central bank rate hikes, raising risks for U.S. and markets
The focus on central banks outweighed what analysts described as a largely supportive weekly fall of 3.8 million barrels in U.S. crude inventories reported by the Energy Information Administration.
The U.S. dollar was rallying versus major rivals, with the ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six others, was up 0.6% on Friday. A stronger dollar can put pressure on commodities priced in the unit, making them more expensive to users of other currencies.
This story originally appeared on Marketwatch
