Brent crude futures were down 52 cents, or 0.7%, at $72.56 a
barrel as of 1100 GMT, extending a 1.8% decline on Thursday. The
contract is set to be largely steady for the week.
U.S. West Texas Intermediate (WTI) crude futures were down 39
cents, or 0.6%, at $70.65 a barrel, after retreating 1.5% on
Thursday and is also set to be flat on the week.
On Wednesday, Brent settled at its highest price since April
2019 while WTI settled at its highest since October 2018.
"Oil markets retreated sharply overnight as a stronger U.S.
dollar and falling commodity prices elsewhere saw the overbought
technical correction continue," said Jeffrey Halley, senior
market analyst at OANDA.
The dollar has rocketed in the two sessions since the U.S.
Federal Reserve projected possible rate hikes in 2023, earlier
than market watchers previously expected. A rising dollar makes
oil more expensive in other currencies, curbing demand.
The prospect of rate hikes also weighed on the longer-term
growth outlook, which would eventually hurt oil demand, in
contrast to the near-term outlook for growth in demand as
COVID-19 related curbs on movement and business activity ease
and road and air travel pick up, said Westpac senior economist
Justin Smirk.
"The near term's all very positive. The question is how much
further can it rise, how much scope is there if you're looking
at an environment where interest rates are going to rise," Smirk
said.
Oil prices also fell after Britain on Thursday reported its
biggest daily rise in new cases of COVID-19 since Feb. 19, with
government figures showing 11,007 new infections versus 9,055 a
day earlier.
Adding to negative sentiment were remarks from Iran's top
negotiator on Thursday saying talks between Tehran and
Washington on reviving the 2015 Iran nuclear deal have come
closer than ever to an agreement.
(Additional reporting by Sonali Paul in Melbourne and Aaron
Sheldrick in Tokyo; Editing by Kim Coghill and Jason Neely)
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