By Gina Lee
Investing.com – Oil was down Friday morning in Asia, giving up its gains from the previous session. A strong dollar continued to fuel bets that the U.S. Federal Reserve will hike interest rates earlier than expected in response to high inflation.
Brent oil futures fell 0.81% to $82.20 by 11:16 PM ET (4:16 AM GMT) and WTI futures were down 0.76% to $80.97.
Both Brent and WTI futures were set to end the week on a flat note, after a volatile week driven by a strengthening dollar and speculation on whether the U.S. would release oil from the U.S. Strategic Petroleum Reserve to curb soaring oil prices.
"The market is in a finely balanced situation," Westpac senior economist Justin Smirk told Reuters.
He added that while the market is tightly supplied, the bigger issue is the change in the fuel demand dynamic. The market is moving away from a strong economic recovery driven by a revival in demand for goods, which in turn has stoked energy demand, toward recovery in demand for services.
Although fuel demand is rising thanks to a brisk pickup in air travel, tighter monetary and fiscal policy and winter in the northern hemisphere winter could dampen that demand.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) on Thursday cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day from October's forecast, as high energy prices curb the recovery from COVID-19.
The oil market will remain tight into the third quarter of 2022 as demand continues to recover, according to National Australia Bank (OTC:NABZY) commodities analyst Baden Moore.
OPEC and allies, or OPEC+, has been very canny in its management of global supply as demand recovers from the pandemic, and the group remains well-positioned from this perspective," Moore told Reuters.
OPEC+ said that it would stick to its plan to add 400,000 barrels per day to the market each month after its meeting during the previous week.