Oil prices fell more than 2% today and were on track for a weekly decline after the US central bank indicated interest rate cuts could be delayed by at least two more months.
Brent crude futures were down $1.89, or 2.3%, at $81.78 a barrel at 1700 GMT, while US West Texas Intermediate crude futures were down $1.88, or 2.4%, to $76.73.
For the week, Brent is set to decline about 2% and the US benchmark is on track to fall about 3%. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.
US Federal Reserve policymakers should delay interest rate cuts by at least another couple of months, Fed Governor Christopher Waller said on Thursday, which could slow economic growth and curb oil demand.
"The entire energy complex is reacting, because if inflation begins to come back it will slow demand for energy products," said Tim Snyder, economist at Matador Economics.
"That is not something the market wants to digest right now, especially as it is trying to figure out a direction," he added.
Some analysts however say demand has remained largely healthy despite the impact of high interest rates, including in the United States.
JPMorgan's demand indicators are showing oil demand rising by 1.7 million barrels per day (bpd) month over month through Feb. 21, its analysts said in a note on Friday.
"This compares to a 1.6 million bpd increase observed during the prior week, likely benefiting from increased travel demand in China and Europe," the analysts said.
The Fed has held its policy rate steady in a 5.25% to 5.5% range since last July. Minutes of its meeting last month show most central bankers were worried about moving too quickly to ease policy.
Meanwhile, Gaza truce talks were underway in Paris on Friday in what appears to be the most serious push in weeks to halt the conflict in Palestine and see Israeli and foreign hostages released.
Ceasefire talks could prompt the market to anticipate an easing of geopolitical tensions, Tim Evans, an independent oil market analyst, said in a note.
Still, tensions in the Red Sea continued, with attacks by Iran-backed Houthi militants near Yemen on Thursday forcing more shipping vessels to divert from the trade route.
