Brent crude falls to $80 on demand concerns and weak economic data

After four straight positive weeks for crude oil markets, both Brent and WTI are set to close this week with significant losses so far, as market sentiment has deteriorated after the softer-than-expected economic data in USA-the world’s largest oil consumer, along with the larger crude inventories, the fear for higher rates, and the uncertainty over demand growth outlook.

Brent crude, 2-hour chart

Brent price hit a three-week low of $80.50/b on Friday morning, losing over $7/b or nearly 8% after topping at nearly $87.50/b last week, while WTI price broke below the key $77/b support level on also $7/b lower from last week’s high of $84/b.

Energy investors have turned sellers on oil prices this week, and took out profits after the recent rally, concerned that the higher interest rates and hawkish monetary stance from major central banks of Federal Reserve, ECB, and BoE will damage economic growth in the following quarters, declining the demand for petroleum products.

Federal Reserve is largely expected to hike interest rates by another 25 bps in the next FOMC policy meeting on May 02-03, with similar hike expectations in Europe and UK in the same week amid the persistently high inflation.

Oil prices added losses on Thursday on signs of an economic slowdown following some softer-than-expected readings on manufacturing and labor reports in the United States, the world's largest crude oil consumer, at a time when the gasoline inventories unexpectedly increased last week, showing another sign of lower fuel demand in the country.

The 6% weekly losses happened despite the positive economic growth signals from China, the world’s second-largest oil consumer after the U.S., where first-quarter GDP grew more than expected after the country relaxed most anti-COVID measures earlier in the year, which has improved the domestic demand for petroleum products.