© Reuters. FILE PHOTO: A Marathon Oil well site is seen, as oil and gas activity dips in the Eagle Ford Shale oil field due to the coronavirus disease (COVID-19) pandemic and the drop in demand for oil globally, in Texas, U.S., May 18, 2020. Picture taken May 18, 20
By Shariq Khan
BENGALURU (Reuters) – Oil prices fell more than a dollar a barrel on Friday as the dollar strengthened and oil traders booked profits from a strong rally, with crude benchmarks on course for a third weekly gain.
futures were down $1.41, or 1.7%, to $79.95 a barrel at 1:16 p.m. EDT (1716 GMT). U.S. West Texas Intermediate crude futures were down $1.40, or 1.8%, to $75.49 a barrel.
“It just appears to be some profit taking, with some demand concerns coming back to the front and center as the dollar rebounds,” said John Kilduff, partner at Again Capital.
The edged higher after hitting a 15-month low during the session, as investors consolidated ahead of the weekend. A stronger greenback reduces oil demand, making crude more expensive for investors holding other currencies.
Next week, however, the rally could resume as easing inflation, plans to refill the U.S. strategic reserve, supply cuts from OPEC and disruptions elsewhere could support the market, said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
“While oil prices are likely slightly overbought in the very near term, touching the highest levels since early May, the bias appears to be for a grind higher,” Haworth said.
Oil prices remained on course for a weekly gain of more than 2%, after supply disruptions in Libya and Nigeria heightened concerns that the markets will tighten in coming months.
Several oilfields in Libya were shut down on Thursday because of a local tribe’s protest against the kidnapping of a former minister. Separately, Shell (LON:) suspended loadings of Nigeria’s Forcados owing to a potential leak at a terminal.
The Libya disruption is halting an estimated 370,000 barrels per day (bpd) while the loss from the Nigerian outage is pegged at 225,000 bpd, said PVM analyst John Evans.
Russian oil exports have also decreased significantly and, if this trend continues next week, it would probably drive prices up further since Russian oil exports are set to be reduced by 500,000 bpd in August, added Commerzbank (ETR:) analysts.
This story originally appeared on Investing
