Investing.com — Oil prices were flat on Friday, coming under pressure from a stronger dollar after U.S. inflation grew as expected in July, while the OPEC group maintained a positive outlook for global demand.
Prices were also set to gain for a seventh straight week, although they substantially trimmed their weekly gains after the .
The readings pushed up expectations that the Federal Reserve will keep interest rates on hold in September. But given that the readings were still comfortably above the Fed’s annual target, rates are expected to remain higher for longer.
The strengthened after the reading, pressuring oil prices. Growing concerns over China also weighed on oil markets, especially as recent data pointed to worsening economic conditions in the world’s largest oil importer.
futures steadied around $86.41 a barrel, while futures rose slightly to $82.90 a barrel by 22:10 ET (02:10 GMT).
But both contracts were set to add about 0.4% this week, and were still trading close to their highest levels for the year.
OPEC sees robust 2024 demand as production drops
The Organization of Petroleum Exporting Countries (OPEC) said on Thursday that its production fell substantially in July, following deep cuts by Saudi Arabia and Russia.
The cartel maintained its outlook for global oil demand in 2023 and 2024, and also slightly increased its forecast for global economic growth.
The positive outlook for demand, coupled with signs of tightening global supplies, had underpinned a rally in oil prices over the past two months, putting Brent at its highest level since January, while WTI hit a 10-month high.
But worsening economic conditions in China and the prospect of high U.S. interest rates raised some questions over the cartel’s positive outlook.
Stronger dollar, China risks stifling oil rally
Strength in the dollar, as markets positioned for U.S. rates remaining higher for longer, weighed on an oil rally in recent sessions. While prices were set for a seventh straight week of gains, their pace of weekly gains appeared to have slowed substantially.
Concerns over China, the world’s largest oil importer, were also a key pain point for oil markets.
Dismal and data released this week, particularly data showing a slump in China’s oil imports, weighed on market optimism over a demand recovery.
The country is also grappling with a potential debt crisis in its property sector, which is likely to further dent growth if left unchecked this year. New investment curbs by the U.S. on China also hurt sentiment, as markets feared a resurgent trade war.
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