Oil headed for its first weekly loss since June as concerns over economic weakness in China and potentially even tighter monetary policy in the US combined to overshadow signs of a tighter physical market.
West Texas Intermediate declined to near $80 a barrel, set for a fourth drop in five sessions. Crude has shed more than 3% this week as poor economic data from China weighed on risk assets including oil. That has more than offset signs of a tighter market, with US stockpiles hitting the lowest level since January.
In the US, Federal Reserve policymakers have signaled they may not be done yet in hiking rates to tame inflation, helping to lift US Treasury yields and aiding the dollar. The US currency is on course for a fifth weekly gain, the longest run in more than a year, which dulls the allure of commodities for international buyers.
Crude remains markedly higher from its lows in June, driven largely by supply cuts by OPEC+ linchpins Saudi Arabia and Russia. That’s led many observers, including the International Energy Agency, to forecast tighter balances and higher prices before the year is out. Nevertheless, Citigroup Inc. has countered that oil will weaken as consumption disappoints and supply swells.
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