Oil prices rose 3% in European trade after hovering near two-week highs for the last couple of days, now heading for the first weekly profit in a month. 

Prices are also boosted by a drop in US crude stocks according the latest US official data, in a positive sign for demand in the US. 

Global Prices

US crude rose 3% to $108.92 a barrel, while Brent climbed 2.8% to $112.32 a barrel. 

US crude lost 3.3% on Thursday, while Brent shed 5.5%, the second loss in a row on active profit-taking off two-week highs. 

Prices were pressured as the Ecuadorian government reached a deal with the rioting  opposition to end two weeks of protests and resume oil production., 

Oil prices are up 0.75% so far this week on track for the first weekly profit in a month. 

Global Supplies 

Concerns about global supply shortages led to a surge in prices as several countries struggle to produce oil. 

Libyan Output

Libyan authorities said they might close some oil exporting ports amid overwhelming conditions that are preventing proper operations.

Macron

French President Emanuel Macron told his US counterpart Joe Biden that the communicated with UAE government and Saudi governments, and both are at their upper limits of production.

US administration has been trying to pressure UAE and Saudi Arabia to increase output to offset some of the Russian shortages.

OPEC +

The OPEC + organization agreed to maintain current production plans unchanged, with goals of hiking production by 648 thousand bpd in July and August. 

US Stocks 

Official US data showed US commercial stocks fell by 2.8 million barrels on Wednesday in the week ending June 24, the second decrease in a row, while analysts expected a 0.9 million barrels drop. 

Now total stocks are down to 415.5 million barrels, the lowest since the week ending May 17. 

Dollar rose in European trade against a basket of major rivals, edging near two-week highs ahead of important US industrial data for June on US growth. 

The Index

The dollar index rose over 0.4% to 105.21 from a session-low at 104.74. 

The dollar closed yesterday down 0.4%, the first decline in three days on active profit-taking off two-week highs at 105.54. 

Monthly Trading

The dollar is up 2.9% in June, heading for the fifth monthly profit in the last six months. 

The Fed took a historic decision this month to hike rates by 0.75% to 1.75%, the highest hike since 1994.

The decision came on commitment to fight runaway inflation, which hit 1981 highs in May, in turn boosting dollar's standing. 

Data

Now markets await US data on the ISM manufacturing PMI to measure economical growth in the second quarter, with the index expected down at 54.6 in June from 56.1 in May. 

Gold prices declined in European trade for the fifth straight session, piercing through $1,800 and hitting six-week lows. 

Gold is heading for the largest quarterly loss since early 2021 as global central banks move to hike rates and control inflation. 

Prices Today

Gold prices fell on Friday by 0.85% to $1,792, the lowest since May 16, after losing 0.6% yesterday, the fourth loss in a row. 

Gold lost 1.6% in June, the third monthly loss in a row as investors buy up the greenback in scores. 

The Dollar

The dollar index rose 0.3% on Friday, resuming the gains after a hiatus yesterday, and muscling up against a basket of major rivals, weighing on gold prices. 

Analysts are betting on a 0.75% rate in the next month, in turn underpinning dollar's standing. 

Quarterly Losses 

Gold prices have lost 6.7% in the second quarter of the year, the first such loss in the last three quarters. 

The Fed took a historic decision this month to hike rates by 0.75% to 1.75%, the highest hike since 1994.

Bank of England hiked rates by 25 basis points to 1.25%, the fifth such increase in a row.

Swiss Central Bank decided to hike rates by 50 basis points at the June 16 meeting to minus 0.25%, the first such increase since 2007, while analysts expected no change at minus 0.75%.

Higher interest rates weaken demand on gold prices as it becomes less attractive as an investment.

The SPDR

Gold holdings at the SPDR Gold Trust fell 2.32 tones yesterday, the eighth decrease in a row, to a total of 1,050 tones, the lowest  since May 17. 

Euro trimmed its losses in European trade off two-week lows against  dollar following record-high inflation data in Europe, bolstering the case for a 0.5% rate hike at the next meeting. 

ECB President Christine Lagarde said this week the ECB is committed to controlling inflation even if that led to economic pain. 

Prices Today

EUR/USD fell 0.45% to 1.0433, with a session-high at 1.0485, while trimming the losses to 0.1% after the inflation data. 

Euro rose 0.4% on Thursday, the first profit in three days, off two-week lows at 1.0382. 

Record Inflation 

Europe's consumer prices rose to 8.6% in June, highest on record, above estimates of 8.5%, and above May's 8.1% reading. 

Core prices, including food and fuel, rose 3.7%, missing estimates of 3.9%, and below 3.8% in the previous reading. 

Lagarde

Christine Lagarde said the ECB is working on controlling runaway inflation no matter the consequences, however she doesn't expect the euro zone to fall into remission. 

European Rates Estimates 

Analysts are going as far as expecting the ECB to hike rates by 0.5% in July, even if a 0.25% hike is still the predominant bet here.