LONDON: Oil ended the week markedly lower, as traders worried that future U.S. interest rate hikes could weigh on demand and got nervous about mounting signs of ample crude and fuel supply.
On Thursday, two Fed officials warned additional hikes in borrowing costs are essential to curb inflation. The sentiments lifted the U.S. dollar, making oil more expensive for holders of other currencies.
Brent crude futures settled down $2.14 or 2.5 percent, to $83.00 a barrel, falling 3.9 percent week on week. West Texas Intermediate (WTI) U.S. crude settled down $2.15, or 2.7 percent, to $76.34, falling 4.2 percent from last Friday's settlement.
"Rate hike jitters have returned with a vengeance," said Stephen Brennock of oil broker PVM.
Various signs of ample supply also weighed on the market.
Russian oil producers expect to maintain current volumes of crude oil exports, despite the government's plan to cut oil output in March, the Vedomosti newspaper said, citing sources familiar with companies' plans.
The latest snapshot of U.S. supplies, released on Wednesday, showed crude inventories in the week to Feb. 10 rose
by 16.3 million barrels to 471.4 million barrels, their highest level since June 2021.
"Because oil storage is at a 19 month high, refiners are going to stretch out turnaround season for as long as they can," said Bob Yawger, director of energy futures at Mizuho.
Heating oil cracks fell 5 percent on Friday as warm weather sapped demand for the fuel in mid-February.
The oil and gas rig count, an early indicator of future output, fell by one to 760 in the week to Feb. 17, energy services firm Baker Hughes Co said.
Despite this week's rig decline, Baker Hughes said the total count was still up 115, or 18 percent, over this time last year.
Some support came from moves this week by the International Energy Agency and the Organization of the Petroleum Exporting Countries to raise their forecasts for global oil demand growth this year, citing expectations for more Chinese demand.
And Saudi Arabia's energy minister said the current deal by OPEC+, which groups OPEC producers with Russia and others, to cut oil output targets by 2 million barrels per day, would be locked in until the end of the year, adding he remained cautious on Chinese demand.
Meanwhile, India's Russian oil imports climbed to a record 1.4 million barrels per day (bpd) in January, up 9.2% from December, with Moscow still the top monthly oil seller to New Delhi, followed by Iraq and Saudi Arabia, data from trade sources showed.
Last month Russian oil accounted for about 27 percent of the 5 million bpd of crude imported by India, the world's third-biggest oil importer and consumer, the data showed.
India's oil imports typically rise in December and January as state-run refiners avoid maintenance shutdowns in the first quarter to meet their annual production targets fixed by the government.
Refiners in India, which rarely used to buy Russian oil because of costly logistics, have emerged as Russia's key oil client, snapping up discounted crude shunned by Western nations since the invasion of Ukraine last February.
Last month India's imports of Russian Sokol crude oil were the highest so far at 100,900 bpd, as output from the Sakhalin 1 field resumed under a new Russian operator, the data showed.
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