By Ambar Warrick
Investing.com — Oil prices fell further on Friday as markets awaited labor market data for more cues on U.S. monetary policy, although fears of rising interest rates and disappointing data from China put crude on course for steep weekly losses.
The Federal Reserve became a key point of focus for oil markets this week, after hawkish signals from the bank’s battered crude prices with the prospect of higher interest rates. Markets grew fearful that a potential U.S. recession, triggered by tighter monetary conditions, could wallop oil demand this year.
While the reading is expected to have retreated sharply from January, any signs of resilience in the jobs market give the Fed more headroom to keep hiking rates. Nonfarm payrolls have also consistently topped estimates for the past 10 months.
Expectations of higher interest rates boosted the , which weighed on commodities priced in the currency, chiefly oil. A stronger dollar also makes oil more expensive for international buyers, which hurts demand.
Weak economic signals from China also upset oil markets, as the world’s largest oil importer logged a drop in oil imports in the January-February period.
Softer-than-expected from the country pointed to a staggered economic recovery after the lifting of anti-COVID measures, weighing on bets that a rebound in China will drive oil demand to record highs this year.
While the country saw a strong rebound in business activity through February, this has yet to translate into increased demand for crude and other commodity imports.
Pessimism over the Fed and China saw oil markets largely trade past signs of a potential tightening in supply.
Data earlier this week showed that U.S. unexpectedly fell in the past week, after 10 straight weeks of builds. Major U.S. oil executives also said that production in the country had likely peaked.
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