Oil prices fell for a second straight session on Friday as the U.S. dollar soared on the prospect of interest rate hikes in the United States, but they were on track to finish the week little changed and only slightly off multiyear highs.
Brent crude futures were down 64 cents, or 0.9, at 72.44 a barrel as of 0900 GMT, extending a 1.8 decline on Thursday. The contract is set to be largely steady for the week.
U.S. West Texas Intermediate WTI crude futures were down 53 cents, or 0.8, at 70.51 a barrel, after retreating 1.5 on Thursday and is also set to be flat on the week.
On Wednesday, Brent settled at its highest price since April 2019 while WTI settled at its highest since October 2018.
Oil markets retreated sharply overnight as a stronger U.S. dollar and falling commodity prices elsewhere saw the overbought technical correction continue, said Jeffrey Halley, senior market analyst at OANDA.
The dollar has rocketed in the two sessions since the U.S. Federal Reserve projected possible rate hikes in 2023, earlier than market watchers previously expected. A rising dollar makes oil more expensive in other currencies, curbing demand.
The prospect of rate hikes also weighed on the longerterm growth outlook, which would eventually hurt oil demand, in contrast to the nearterm outlook for growth in demand as COVID19 related curbs on movement and business activity ease and road and air travel pick up, said Westpac senior economist Justin Smirk.
The near term39;s all very…