Oil prices extended losses on Friday, heading for a 4% weekly drop and burdened by the prospect of rate hikes, weaker global growth and Covid-19 lockdowns in China affecting demand, amid U-ropean Union ban on Russian oil.
The International Monetary Fund this week cut its global economic growth forecast while the U.S. Federal Reserve Chair on Thursday said that a half-point increase to interest rates “will be on the table” at the next Fed policy meeting in May.
Brent crude was down 76 cents, at $107.57 a barrel. U.S. West Texas Intermediate (WTI) crude declined 32 cents, to $103.47.
This week has been the least volatile week of trade since Russia launched its invasion of Ukraine on February 24, sparking sanctions that cut Russian oil supply and led consuming nations to release a record volume of oil from emergency stocks
The outlook for demand in China, the world’s biggest oil importer, continues to weigh. Shanghai announced a new round of measures including daily coronavirus testing from Friday, adding to strict measures to curb the latest outbreaks.
Brent hit $139 a barrel last month, its highest since 2008, but both oil benchmarks were heading for weekly declines of more than 3% this week.
Ongoing support is provided by supply tightness after disruptions in Libya, which is losing 550,000 barrels per day (bpd) of output, and supply could be squeezed further if the European Union imposes an embargo on Russian oil.
An EU source told Reuters this week the European Commission is working to speed up availability of alternative energy supplies to try to cut the cost of banning Russian oil and persuade reluctant nations to accept the measure.