By 11:21 a.m. (1521 GMT), Brent futures had dropped 13 cents to $83.75 a barrel. At $79.22 per barrel, U.S. West Texas Intermediate oil dropped 4 cents.
For the week, both benchmarks were essentially flat.
According to Jim Ritterbusch of Ritterbusch and Associates, swelling U.S. oil product inventories were putting pressure on prices as the usually active summer driving season drew near.
“Some bearish demand adjustment would appear likely given the price decline of the past month and the weaker-than-expected demand trends for US gasoline and diesel,” Ritterbusch stated.
Read more: Oil Markets Plunge as Dollar Surges on Anticipation of Higher Rates
On Thursday, data indicated that China imported more oil in April compared to the same month the previous year, which helped to stabilize prices. After falling the month before, China’s imports and exports increased in April.
Following remarks by Dallas Federal Reserve President Lorie Logan that it was questionable if policy was strict enough to reduce inflation to the US central bank’s 2% target, oil prices were also under pressure as the US dollar surged. For buyers using other currencies, oil is more expensive when the dollar is strong, and demand may be suppressed by higher U.S. interest rates for longer periods of time.
The US inflation report for next week may have an impact on the Fed’s interest rate decisions.
In the meanwhile, it appears more likely than not that the European Central Bank will begin lowering rates in June.
Higher interest rates inhibit both economic growth and oil demand, whereas lower rates often encourage both.
The latest in a string of tit-for-tat strikes on energy infrastructure, an oil refinery in Russia’s Kaluga region was set on fire by a Ukrainian drone attack, according to RIA official news agency on Friday.
Israel’s groundwork for an intervention in Rafah and growing tensions on its northern border are a reminder that geopolitical risks could persist through all of Q2 2024, at least,” Citi analysts said in a note.
However, the bank expects prices to ease through 2024, with Brent averaging $86 a barrel in the second quarter and $74 in the third quarter amid signs that global oil demand growth “appears to be moderating”.