Investing.com -- Crude oil prices fell Friday, on course to end a run of seven consecutive positive weeks, on fears a slowing Chinese economic recovery will hit future demand from the world’s largest importer.
By 08:40 ET (12:40 GMT), the U.S. crude futures traded 0.9% lower at $79.64 a barrel, while the Brent contract dropped 0.9% to $83.36.
Both benchmarks are on course to drop more than 3% this week, ending a seven-week upswing in prices, galvanized by supply cuts by the Organization of the Petroleum Exporting Countries and allies.
Looking for more PBOC support
China, the world’s second largest economy, has been grappling with a slowing post-COVID economic recovery, exacerbated by weakness in its important property sector.
This has raised concerns that this lower economic activity would hit demand for crude from a country that was meant to pick up a lot of the slack that tight monetary policies in the West have generated.
The People’s Bank of China unexpectedly cut short and medium-term lending rates earlier this week, but investors are calling on more targeted, fiscal measures to support the economy.
Strong dollar weighs on crude prices
Another factor weighing on prices is concerns that the U.S. Federal Reserve is not quite finished with hiking interest rates to tackle inflation, especially after the release of hawkish Fed minutes this week.
Resilience in the U.S. economy has helped the U.S. dollar post strong gains this week. Strength in the greenback also weighed on oil prices, given that it makes crude more expensive for international buyers.
More upside remains - ING
However, crude markets did have some good news after data from the Energy Information Administration showed that U.S. crude oil inventories fell by nearly 6 million barrels last week.
U.S. oil demand has remained stable over the past few months, but markets have feared a potential decline in fuel consumption, especially as the end of the summer season approaches.
“We believe that there is still room for the market to move higher. Our balance sheet suggests that the oil market will continue to tighten as we move through the second half of the year with a deficit in the region of 2MMbbls/d,” said analysts at ING, in a note.
“We have left our forecasts for the remainder of the year unchanged. We still expect ICE Brent to average US$86/bbl over 3Q23 and US$92/bbl over 4Q23.”
(Ambar Warrick contributed to this item.)