Oil headed for a substantial weekly loss, hurt by the Federal Reserves move toward tapering asset purchases, a rally in the U.S. dollar and concerns about global energy demand.
West Texas Intermediate has shed more than 6% this week, and closed at the lowest since May on Thursday amid a broad retreat across commodities. Most-active prices for the U.S. benchmark climbed 0.5% to around $64 a barrel in early trading on Friday.
Oil has been buffeted this month by the prospect of the Fed cutting back on its extraordinary monetary stimulus despite the spread of the delta coronavirus variant. The pandemic remains a threat to energy demand, especially across Asia, with key importer China restricting mobility to combat an outbreak.
Crudes sudden bout of weakness, which follows a powerful rally in the first half, may prompt OPEC+ to pause its next planned production increase, according to Citigroup Inc. The 23-nation group led by Saudi Arabia and Russia is scheduled to meet to assess the state of the market on Sept. 1. At present, members are due to add another 400,000 barrels a day of supply next month.
The dollar hit the highest level since November following the Fed‘s move. That makes commodities including crude more expensive for overseas buyers. Oil’s drop was matched by retreats in copper and other raw materials.