International Demand

Oil drops slightly as demand worries weigh, heading for weekly decline

An aerial view shows an oil plant of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Mandatory Credit Kyodo/via REUTERS

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June 17 (Reuters) – Oil prices fell slightly on Friday as worries about global economic growth and uncertainty weighed on markets after numerous interest rate hikes around the world this week.

Brent crude futures fell 83 cents, or 0.8%, to $118.98 a barrel, while US West Texas Intermediate (WTI) crude futures fell to 116.79 $ a barrel, down 80 cents, or 0.7%.

If the losses continue throughout the day, Brent futures would post their first weekly decline in five weeks, while U.S. crude futures would see their first decline in eight weeks.

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Central banks across Europe hiked interest rates on Thursday, some by an amount that shocked markets, and hinted at even higher borrowing costs to tackle runaway inflation that erodes savings and squeezes corporate profits. Read more

Argentina’s central bank raised its benchmark interest rate to the highest in three years on Thursday, as the South American country battles inflation above 60%. Read more

The moves came on the heels of a 75 basis point rate hike this week by the US Federal Reserve, the highest since 1994.

Federal Reserve policymakers are less confident than at any time since the peak of the pandemic about what will happen with the economy, the data shows. Read more

U.S. stock indexes also closed sharply lower on Thursday in a broad selloff as recession fears grew. Read more

The International Energy Agency also warned on Wednesday that soaring oil prices and weakening economic forecasts were clouding prospects for future demand. Read more

Investors also remained focused on tight supplies after the United States announced new sanctions against Iran.

“A rebound in demand sentiment in China and an expected seasonal surge in OECD oil demand in August leaves price risk on the upside through Q3 2022,” said Baden Moore, head of oil. commodity research at the National Australia Bank.

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Reporting by Arathy Somasekhar in Houston; Edition by Lincoln Feast.

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