Investing.com — Oil prices retreated Friday, heading for hefty weekly losses, after a series of rate hikes, and the indication of more to come, added to concerns over global economic growth.
By 08:55 ET (12:55 GMT), futures traded 1.7% lower at $68.25 a barrel, while the contract fell 1.6% to $72.95 a barrel. Both contracts are on course for weekly losses of more than 4%.
Large Bank of England rate increase hits sentiment
The surprised markets on Thursday by hiking interest rates by a hefty 50 basis points as it battles the highest of all the major economies.
Central banks in and also hiked rates, and officials at all of these banks indicated the likelihood of further increases ahead. Add in Fed chief also pointing to the need for further monetary tightening and fears are growing that this will result in worsening economic conditions, hitting the demand for crude.
U.S. crude inventories shrink
This weakened sentiment overshadowed a fairly constructive report from the Energy Information Administration, which showed that U.S. shrank far more than expected in the week to June 16
“In addition, implied U.S. oil demand (total product supplied) hit 20.93MMbbls/d over the week – the highest number seen since December,” said analysts at ING, in a note.
PMI data offers downside risk
The main economic release Friday will be the June surveys, which are expected to show the country’s activity stagnating while the sector still expands.
However, this follows surprisingly soft readings in the euro zone, Japan, and Britain, suggesting downside risk is a possibility.
Baker Hughes rig count due
The week ends, as usual, with rig count numbers from and positioning data.
“If it continues to follow the trend seen so far this year, we can expect a further decline in drilling activity,” added ING. “Higher costs have likely contributed to slower drilling activity.”
Additionally, given the move in the oil market over the last reporting week and the increase in open interest, we could see the net speculative long in having grown over the week.
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