Oil headed for a weekly loss of more than 3% after the Federal Reserve signaled that further rate hikes were needed, bruising appetite for risk, aiding the dollar, and raising the prospect of an economic slowdown.

West Texas Intermediate was steady below $70 a barrel after tumbling 4.2% on Thursday. In testimony this week, Fed Chair Jerome Powell signaled further monetary tightening was likely in the second half. That lifted the greenback, dimming the allure of commodities priced in the US currency.

In Asia, traders have been trying to gauge prospects for demand in China, the world’s largest crude importer. While Beijing has rolled out some stimulus to aid growth, there’s concern the moves so far may not be enough.

Oil is set for a back-to-back quarterly loss as the Fed has lifted rates and traders fret about demand. The drop has come despite production cuts from the Organization of Petroleum Exporting Countries and its allies. At present, key metrics including WTI’s prompt spread indicate ample near-term supply.

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--With assistance from Rob Verdonck.

Author: Jake Lloyd-Smith