Oil prices plunged on Friday, retreating from the 11-month high reached last week, as they are under pressure due to fears that new restrictions imposed to combat the Corona pandemic in China will curb demand for fuel in the world’s largest importer of crude.
U.S. West Texas Intermediate crude futures fell 65 cents, or 1.2%, to $ 52.48 a barrel by 0740 GMT, after falling 18 cents on Thursday.
Brent crude futures fell 58 cents, or 1.03%, to $ 55.52 a barrel, erasing a two-year gain it made on Thursday.
“In line with the more cautious atmosphere that the financial markets have shown today in Asia, the two decades have gone backwards …” said Geoffrey Haley, senior market analyst at Onda.
“The decline this morning leaves the two decades at the midpoint of their two-week ranges. They are likely to be exposed to deeper corrections if official data on US crude stocks this evening showed an unexpected rise,” he added.
The market is awaiting the official data on oil inventories issued by the US Energy Information Administration on Friday after data for the sector revealed on Wednesday a sudden increase of 2.6 million barrels in US crude stocks last week, compared with analysts’ expectations of a decrease of 1.2 million barrels.
The recovery in fuel demand in China boosted market gains late last year while the United States and Britain lagged behind in the recovery, but that source of support dissipated as a new wave of COVID-19 infections triggered new restrictions to contain the spread.
Gold fell on Friday as US Treasury yields rose, but the yellow metal is on track to record its best weekly performance in five weeks, supported by hopes of a major stimulus in the United States.
And gold fell in immediate transactions 0.6% to 1859.10 dollars an ounce by 0828 GMT, retreating from the peak of nearly two weeks, which it reached on Thursday. For the week, it rose 1.8%, the biggest weekly gain since the week ending December 18.
And US gold futures fell 0.3% to $ 1860.90. Kyle Roda said, “Gold is suffering due to higher nominal returns, which came on the back of strong numbers of US unemployment benefits. The European Central Bank has also adopted a less accommodative trend compared to what the market wanted.”
And record 10-year US Treasury yields hold above 1% helping the dollar rally.
US jobless claims fell modestly last week, but concerns about the effects of COVID-19 persist.
European Central Bank President Christine Lagarde hinted on Thursday that the bank may not use its emergency procurement program for pandemic-related purchases entirely if financial conditions remain favorable.
As for the other precious metals, silver fell 2% to $ 25.43 an ounce, but it is on track to record its best weekly performance in five weeks, up 2.9%.
Platinum fell 2% to $ 1,104.20, but is heading for gains for the second week in a row, up 2.8%.
Palladium fell 0.1% to $ 2,359.52.
The dollar also stabilized in a cautious Asian session on Friday, but it is heading towards its worst weekly performance since the start of the year as investors welcome Joe Biden’s management by buying higher-risk assets.
Against the Japanese currency, the dollar has fallen 0.3% this week and retreated 0.8% against the euro, the biggest weekly percentage decline since mid-December.
The dollar settled in the last session at $ 1.2172 to the euro and bought 103.54 yen. It advanced slightly against the Australian and New Zealand dollars, but not enough to miss the weekly gains made by the two currencies, which amounted to 0.6% for the Australian dollar and 0.9% for the New Zealand dollar.
Biden, whose Democratic Party controls the US Congress, is seeking to borrow and spend to support the economy. The stimulus anticipation led stocks to record highs, while inflation expectations curbed real returns.
Central banks from Tokyo to Frankfurt this week kept policies unchanged and started talking cautiously about the prospects for a recovery, while the US Federal Reserve appears committed to lower interest rates for a very long time.
The Canadian dollar fell 0.2% to 1.2671 to the US dollar with the decline in oil prices today, but it is up 0.5% this week and reached its highest level in nearly three years yesterday, Thursday, after the Bank of Canada surprised some dealers by not cutting interest rates.
The British pound fell 0.2% from its two-and-a-half year high reached on Thursday, to settle at $ 1.3707. The British currency is receiving support from the hope that vaccines against the Coronavirus will boost the economic recovery later in the year.
The dollar index settled at 90.110 on Friday and fell 0.7% for the week.