Oil pared its weekly advance, with prices erasing early gains as renewed concerns over financial sector stability buoyed the dollar, making commodities priced in the US currency less attractive.
(Bloomberg) — Oil pared its weekly advance, with prices erasing early gains as renewed concerns over financial sector stability buoyed the dollar, making commodities priced in the US currency less attractive.
West Texas Intermediate slumped below $70 a barrel after the dollar’s jump on a broader decline in risk appetite. The US crude benchmark has advanced by less than $3 a barrel this week, while the US currency has lost less than 1%. Oil’s weekly gain follows a significant decline last week as banking crises flared.
Crude remains on course for its steepest first-quarter drop since 2020, when the pandemic eviscerated demand. That slump has been driven by a potential US recession, robust Russian flows despite Western sanctions, and strikes at refineries in France.
Still, after the Federal Reserve hiked interest rates again this week, more investors are betting that its tightening campaign is now close to an end, hurting the US currency.
“In the short term, the oil balance looks quite comfortable and that’s due to Russian supply holding up better than expected,” Warren Patterson, head of commodities strategy for ING Groep NV, told Bloomberg Television on Friday. Still, the global crude market should tighten in the second half as Chinese demand increases, supporting higher prices, he said.
As crude rose this week, serial commodities bull Goldman Sachs Group Inc. again made the case that it will do well this year as part of a broader commodity rally. Oil’s fundamentals and physical-demand indicators are still bullish, it said.
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