Crude oil prices fell on Friday on the dollar’s strength and worries about the outlook for energy demand.
Fears of the U.S. falling into a recession and the impasse in debt ceiling talks boosted dollar’s safe-haven appeal and hurt oil prices.
U.S. Treasury Secretary Janet Yellen warned that a default on the U.S. debt would be catastrophic and was “unthinkable.”
Fears of a banking sector crisis deepened after PacWest announced it lost almost a tenth of deposits in the first week of May.
Federal Reserve Governor Michelle Bowman said in a speech today that interest rates will need to remain sufficiently restrictive for some time to bring inflation down and create conditions that will support a sustainably strong labor market.
The dollar index surged to 102.71, gaining about 0.65%.
West Texas Intermediate Crude oil futures ended lower by $0.83 or about 1.2% at $70.04 a barrel.
Brent crude futures were down $0.72 or 0.95% at $74.26 a barrel a little while ago.
Edward Moya, Senior Market Analyst at OANDA says crude prices are weighed down by the dollar rally and demand concerns emerging from both the U.S. and China.
“News that the US could potentially refill the SPR should mean that we won’t make fresh monthly lows, but that doesn’t mean we can’t see prices soften a bit further here,” he says.
According to a report from Baker Hughes, the total number of total active drilling rigs in the United States fell by 17 this week after falling by 7 last week. It is the largest single-week drop in the number of oil and gas rigs in the United States since June 2020.
The total rig count fell to 731 this week, just 17 rigs higher than the rig count this time in 2022.
Oil rigs in the United States fell by 2 this week to 586. Gas rigs fell by 16 to 141. Miscellaneous rigs rose by 1.
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