By Barani Krishnan
Investing.com -- Oil bulls were staring at their third weekly loss in U.S. crude on Friday as the massive gasoline inventory pile-up of the past fortnight continued to weigh, despite a weaker dollar helping some short-covering to the selling from earlier in the week.
Brent, the global benchmark for oil versus the West Texas Intermediate, or WTI, gauge for U.S. crude, did better, heading for its first positive week in six.
“It’s the weaker dollar that’s the story today and that’s helped oil cut some losses,” said John Kilduff, partner at New York energy hedge fund Again Capital. “But WTI is still the weaker link here, compared to Brent, and that’s because of the huge gasoline build we’ve had the past two weeks.”
U.S. gasoline stockpiles ballooned by about 9 million barrels over the past two weeks in the largest build since the near 14 million barrel jump seen during the January 7th and January 15th weeks.
London-traded Brent rose by 23 cents, or 0.2%, to $104.09 a barrel, paring gains from earlier that took it to a session peak of $106.78. That was after it fell more than $2 to an intraday low of $101.50.
If it stayed this way till the close, Brent would finish the week up about 2.8%, ending a five-week losing streak that had set it back by 17%. The global crude benchmark hit a near five-month low of $95.42 last week.
New York-traded WTI was down 60 cents, or 0.6%, to $95.75 per barrel by 1:52 PM ET (17:52 GMT).
The slide came after another choppy session that took the U.S. benchmark up more than $1.50 to the day’s peak, versus a drop of about $2 to the day’s lows.
If it stayed this way till the close, WTI would finish the week down about 2%. Last week, WTI sank to $90.58 for its worst price since February.
Volatility has been the game in oil since last week’s rate hike fears that propped up the dollar to two-decade highs.
The Dollar Index, which pits the greenback against six major currencies, hit a more than two-week low at 105.983 on Friday, after soaring to 109.140 last week for its highest levels since December 2002.
The slide in the greenback has worsened since the European Central Bank on Thursday joined many other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn.
Friday’s weaker-than-expected U.S. services sector data also weighed on the dollar. S&P Global said the reading on its latest services sector fell to 47 versus a forecast of 52.6 and a prior print of 52.7.
"Excluding pandemic lockdown months, output is falling at a rate not seen since 2009," Chris Williamson, chief business economist at S&P Global (NYSE:SPGI) Market Intelligence, said in the survey.
The dollar fell as Investing.com’s Fed Rate Monitor Tool increasingly priced in a 75 basis point rate hike for July and a final range of 3.25-3.50% by end-December, after the services sector data. Previously, expectations for year-end rates were as high as 4%. Rate cuts are also increasingly being priced in for 2023.