(New York) Oil prices fell on Friday, cooled by a strong dollar and weakening euro zone activity, after strong gains during the week as investors monitor geopolitical risk in the Middle East .
The price of a barrel of Brent from the North Sea, for delivery in August, fell 0.54% to $85.24.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery the same month, which is the first day of use as a reference contract, lost 0.68% to 80.73 dollars.
Brent remained above the $85 level to close the week with a gain of more than 3%, however, underlined Ricardo Evangelista, analyst at ActivTrades.
In the euro zone, the Flash PMI index published on Friday by S&P Global showed a slowdown in manufacturing activity which, however, remained very slightly growing at 50.8, compared to 52.2 in May.
This data strengthened the dollar against the euro. The greenback gained 0.07% around 3:15 p.m. (Eastern time) to 1.0695 dollars per euro.
The dollar index, which compares the greenback against a basket of currencies, climbed 0.18%.
When the dollar strengthens, this increases the cost of oil which is exchanged in dollars and therefore this tends to put pressure on the price of a barrel.
On the front of geopolitical risks, the Israeli army and Hezbollah exchanged new cross-border fire during the night from Thursday to Friday after an escalation in bellicose rhetoric between the two protagonists, raising fears of an extension of the war.
“The entire region could soon be drawn into a conflict likely to disrupt one of the main production areas on the planet,” recalls Mr. Evangelista, even if for the moment, the supply of crude oil is not affected.
Global demand for black gold nevertheless received a positive boost with the publication, the day before, by the American Energy Information Agency (EIA) of a contraction in commercial crude oil stocks of 2.5 million of barrels last week in the United States.
“We note that the upward trend in global oil stocks has stopped,” DNB analysts emphasized.