LONDON: Oil fell for a fourth session on Friday, heading for its biggest weekly loss in five weeks on worries about the prospect of steep interest rate hikes in the United States hitting fuel demand.
Brent dipped 63 cents, or 0.8%, to $80.96 a barrel by 1140 GMT. U.S. West Texas Intermediate crude (WTI) was down 69 cents, or 0.9%, at $75.03.
Expectations of further rate hikes in the world’s largest economy and in Europe have clouded the global growth outlook and driven both crude benchmarks down more than 5% so far this week, their worst drop since early February.
A strengthening dollar is also making oil more expensive for holders of other currencies. Global shares, which often move in tandem with oil prices, hit a two-month low on Friday as investors dumped banks on fears of contagion after a capital raising at Silicon Valley Bank.
U.S. Federal Reserve Chair Jerome Powell has warned of higher and potentially faster rate hikes, saying the Fed was wrong in initially thinking inflation was “transitory”. Its next decision meeting is planned for March 21-22.
Broader U.S. employment data due at 1330 GMT looms as a crucial barometer of the health of the U.S. labour market, considered tight, and as an indicator on the direction of interest rates.
Nonfarm payrolls likely increased by 205,000 jobs last month, according to a Reuters survey.
“A forecast-beating number will be the final nail in the coffin for rate doves and should provide fresh ammo for oil bears,” PVM analyst Stephen Brennock said.
On the supply side, the United States was reported to have privately urged some commodity traders to shed concerns about shipping price-capped Russian oil in a bid to shore up supply.
Investors are closely monitoring export cuts from Russia, which decided to trim oil output by 500,000 barrels per day in March.