Oil prices plunge on higher US interest rate bets

NEW YORK — Oil prices fell by nearly $1 a barrel on Friday as comments from US central bank officials indicated higher-forlonger interest rates, which could hinder demand from the world’s largest crude consumers.

Brent crude futures settled at $82.79 a barrel, down $1.09 or 1.3%. US West Texas Intermediate (WTI) crude settled at $78.26 a barrel, down $1 or 1.3%.

For the week, Brent logged a 0.2% loss, while WTI recorded a rise of 0.2%.

Dallas Federal Reserve President Lorie Logan on Friday said it was unclear whether monetary policy was tight enough to bring down inflation to the US central bank’s 2% goal.

Higher interest rates typically slow economic activity and weaken oil demand.

Atlanta Fed President Raphael Bostic also told Reuters he thought inflation was likely to slow under current monetary policy, enabling the central bank to begin reducing its policy rate in 2024 — though perhaps by only a quarter of a percentage point and not until the final months of the year.

The US dollar strengthened after the Fed officials’ comments, making greenback-denominated commodities more expensive for buyers using other currencies. Higher-for-longer US interest rates could also dampen demand.

Oil prices were also under pressure from rising US fuel inventories approaching the typically robust summer driving season, said Jim Ritterbusch of Ritterbusch and Associates.

This week, US inflation data could influence Fed decisions on interest rates.

Oil drew little support from the US oil rig count, which is an indiNEW cator of future supply, despite energy services firm Baker Hughes data showing the number of oil rigs fell by three to 496 this week, their lowest since November.

Money managers, meanwhile, cut their net long US crude futures and options positions in the week to May 7 by 56,517 contracts to 82,697, the US Commodity Futures Trading Commission said.

Data on Thursday showing China imported more oil in April than the same month last year also helped keep oil prices from moving lower. China’s exports and imports returned to growth in April after contracting the previous month.

The European Central Bank, meanwhile, looks increasingly likely to start cutting rates in June.

In Europe, a Ukrainian drone attack set an oil refinery in Russia’s Kaluga region on fire, RIA state news agency reported on Friday, the latest salvo from Kyiv in what has become a series of tit-for-tat attacks on energy infrastructure. —