West Texas Intermediate futures fell to around $74 a barrel on Friday after closing almost 2% higher in the previous session. Crude dropped following the European market open, which has so far presented a mixed picture in equities and a rise in the dollar. The strengthening greenback pressured the price of oil and broader commodities, as they’re priced in the US currency.
Prices have been supported this week by the ongoing shutdown of Iraq’s oil exports following a dispute between Baghdad and Kurdistan. The impasse has worsened, as Gulf Keystone Petroleum Ltd is to become the latest producer to cut production. Talks between officials from Kurdistan and the Iraqi federal government are set to take place next week, which may see the resumption of over 400,000 barrels a day of Iraqi oil exports which go through Turkey.
China’s recovery showed more signs of strength in March, with manufacturing continuing to expand and construction picking up. Most market watchers are betting the nation’s rebound will help to underpin higher prices this year.
Oil still remains on track for a fifth consecutive monthly loss, primarily due to a banking crisis that rippled through markets earlier in the month, though the worst of the turmoil now appears over. Resilient Russian supply and strikes in France that have curbed crude demand also added to the bearishness.
Investors will be watching a read on US inflation later Friday for clues on the path forward for monetary tightening, as Federal Reserve officials continued to stress the need to lower prices. OPEC+ also meets next week, though changes to production quotas aren’t expected.
“Receding banking risks certainly provide buoyancy, as could the narrative of cooling inflation,” said Vishnu Varathan, the Asia head of economics and strategy at Mizuho Bank Ltd. “Add to that supply disruption risks, and we have oil that is less nervy and more likely to challenge barriers to ascend.”
- WTI for May delivery fell 0.5% to $74.03 a barrel at 9:46 a.m. in London.
- Brent for May settlement, which expires Friday, dipped 0.3% to $78.63 a barrel.
- The more-active June contract dropped 0.7% to $78.06 a barrel.