Oil closes down 2% amid strong dollar advance

Oil fell this Friday (5), pressured mainly by the strong advance of the dollar abroad and the feeling of risk aversion, after the United States payroll reinforced expectations of an interest rate increase by the Fed (Federal Reserve).

However, the context of persistent tensions and uncertainties in the Middle East supported weekly gains in the commodity.

Traded on the New York Mercantile Exchange (Nymex), WTI oil for July closed down 2.69% (US$2.50), at US$90.54. Brent oil for August, traded on London's Intercontinental Exchange (ICE), fell 2.04% (US$1.94), to US$93.09 per barrel. However, during the week, barrels rose 3.64% and 2.16%, respectively.

Oil prices had already fallen slightly since dawn, as investors considered whether the extension of the ceasefire between Israel and Lebanon could be interpreted as hope for a peace agreement between the US and Iran.

The losses intensified after the main American jobs report came out stronger than expected, increasing the perception that the Fed is likely to raise interest rates, rather than cut them, by the end of this year, according to HFE (High Frequency Economics).

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A tighter monetary stance tends to weigh on economic activity and demand, while a stronger dollar reduces the attractiveness of commodities for holders of other currencies.

Thus, energy investors seemed to put Tehran's new threats on the back burner in this trading session. Iran's Supreme Leader Ayatollah Mojtaba Khamenei's military advisor, Mohsen Rezaei, has threatened to expand the war to other unexplored fronts if he fails to reach an agreement with the United States.

For Price Futures Group analyst Phil Flynn, the market is not seeing an escalation between the parties, "even if we don't have an agreement."

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Source: CNN