The oil market is on track to experience its first weekly decline in four weeks, driven by signals from the Federal Reserve regarding potential interest rate hikes within the year. These signals have diminished the appeal of riskier assets, including oil, despite the ongoing physical scarcity in the crude oil market.
West Texas Intermediate (WTI), a key benchmark for crude oil, has remained relatively stable at around $90 per barrel this Friday. This represents a roughly 1% decrease over the course of the week.
Technical analysis suggests that recent price increases in crude oil may have been excessive, contributing to the subdued sentiment among oil investors. This trend continues despite the ongoing physical scarcity in the crude oil market, which has supported prices until now.
The Federal Reserve’s indication that elevated borrowing costs could persist for an extended period has led to a stronger dollar. A stronger dollar typically reduces the appeal of commodities priced in that currency, including oil. This dynamic has contributed to the reduced attractiveness of oil investments in light of potential interest rate hikes.