On Wednesday, larger-than-expected draw in US oil inventories signals recovery in US oil demand
Oil prices decreased more than 5% during the week ending April 21 as fears of higher interest rates and weak US economic data fueled demand concerns.
International benchmark Brent crude was trading at $81.88 per barrel at 4.36 p.m. (1336 GMT) on Friday, posting a 5.3% fall from the Monday session that opened at $86.43 a barrel.
The American benchmark West Texas Intermediate (WTI) registered at $78.19 per barrel at the same time on Friday, decreasing 5.2% compared to the opening price of $82.48 a barrel on Monday.
Oil prices started the week on a positive note in anticipation of the release of positive Chinese economic data.
On Tuesday, China announced its first-quarter gross domestic product, which increased sharply compared to expectations, putting the country in the spotlight after it lifted its strict pandemic measures.
According to China’s National Bureau of Statistics on Tuesday, Chinese GDP grew by 4.5% in the first quarter, marking the highest growth since the first quarter of last year, when it grew by 4.8%.
However, fears of higher interest rates fueled the US dollar’s strength throughout the week, discouraging oil-importing countries from purchasing dollar-indexed crude.
Markets expect rising interest rates and high inflation to dampen oil demand which was supported by Atlanta Federal Reserve President Raphael Bostic’s proposal on Wednesday for “one more interest rate rise” to lower high inflation.
Meanwhile, a larger-than-expected draw in US oil inventories signaled a recovery in US oil demand, limiting price decreases.
US commercial crude oil inventories decreased by 4.6 million barrels to 466 million barrels during the week ending April 14, according to data released by the Energy Information Administration late Wednesday.
Loretta Mester, the head of the Cleveland Federal Reserve Bank, said Thursday that the US central bank still has more interest rate increases ahead of it.
Finally, weak US economic data added further pressure on prices as it raised concerns about a recession and slowing global oil demand.
The number of Americans filing first-time unemployment claims rose by 5,000 last week to 245,000, according to Labor Department data released on Thursday.
The markets will closely watch if the demand will pick up during the summer travel season in the US and in the second half of the year in China, the world’s biggest oil importer.
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