Oil extended Thursday's sharp selloff after the Federal Reserve signaled that further rate hikes were needed, bruising appetite for risk, fortifying the dollar, and raising anxiety over the prospect of economic slowdown.
West Texas Intermediate fell toward $68 a barrel after tumbling 4.2% on Thursday and Brent fell through $73. In testimony this week, Fed Chair Jerome Powell signaled further monetary tightening was likely in the second half. Data on Friday showed German economic activity lost much more momentum than anticipated in June, while France's economy likely contracted in the second quarter.
That's lifted the greenback, dimming the allure of commodities priced in the US currency.
The pace of moves in the oil market has also been exacerbated by technical trading in recent days, with both Brent and WTI falling away sharply after testing the upper ends of the bands in which they had been stuck since early May.
Oil is set for a back-to-back quarterly loss as, in addition to Fed moves, traders fret over demand. The slump has come despite production cuts from the Organization of Petroleum Exporting Countries and its allies. One key gauge of market health, Brent's prompt spread, has weakened heavily in recent days, hitting the softest since January.
WTI for August delivery fell 1.8% to $68.23 a barrel at 9:08 a.m. in London. Brent for August settlement shed 1.7% to $72.89 a barrel. The global crude benchmark has lost about 5% this week.
Source : Bloomberg
