Oil prices fell on Friday, giving up gains made in the previous session as the dollar continued to strengthen amid expectations that the Federal Reserve would hike rates in an attempt to tame inflation.
Brent crude futures fell 1.6% to $81.51 a barrel, and US West Texas Intermediate (WTI) crude fell 1.9% to $80.01.
Both benchmark crude contracts were about to end the week lower after sharp volatility driven by a stronger dollar and speculation over whether the Biden administration would release the US Strategic Petroleum Reserve to calm oil prices.
Meantime, positive signs were seen on the demand side, with air travel rebounding quickly, but monetary and fiscal tightening, and looming winter in the Northern Hemisphere will act as a disincentive.
On Thursday, OPEC cut its forecast for global oil demand for the fourth quarter by 330,000 barrels per day from last month's forecast, as rising energy prices hampered the recovery from the economic repercussions of the pandemic.
"The oil market is sleeping towards oversupply," said Stephen Brennock of BVM oil brokerage.
"OPEC and its allies will need, at the very least, to stop easing their supply restrictions in the new year," he added. Inaction will cause global oil stocks to balloon again.”
OPEC, Russia and its allies, known as OPEC+ agreed last week to stick with plans to add 400,000 barrels per day to the market each month.
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