MELBOURNE — Oil prices dipped in early trade on Friday, extending the week’s losses as concern over tight supply was outweighed by escalating fear of sharp interest rate hikes slamming global growth and hitting fuel demand.
Brent crude futures fell 22 cents, or 0.2%, to $90.62 a barrel as at 0052 GMT after sliding 3.5% to a one-week low in the previous session.
U.S. West Texas Intermediate (WTI) crude futures lost 25 cents, or 0.3%, to $84.85 a barrel, after tumbling 3.8% in the previous session.
“Crude oil fell as the market’s focus returned to the worsening economic backdrop,” ANZ commodities analysts said in client note.
Both benchmarks are headed for a third consecutive weekly loss, hurt partly by a strong U.S. dollar, which makes oil more expensive for buyers using other currencies. The dollar index ticked down on Friday but held near last week’s high above 110.
The market was also rattled this week by the International Energy Agency’s outlook for almost zero growth in oil demand in the fourth quarter due to a weaker demand outlook for China.
“Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and as the inflation fighting Fed seems poised to weaken the U.S. economy,” OANDA analyst Edward Moya said in a note.
Analysts said sentiment suffered from comments by the U.S. Department of Energy that it was unlikely to seek to refill the Strategic Petroleum Reserve until after fiscal 2023.
On the supply side, the market has found some support on dwindling expectations of a return of Iranian crude, as Western officials played down prospects of reviving a nuclear accord with Tehran.
Commonwealth Bank analyst Vivek Dhar said that supported the bank’s view that oil markets will tighten by the end of the year and Brent will return to $100 a barrel in the fourth quarter. (Reporting by Sonali Paul in Melbourne)