Oil prices retreated Friday, heading for hefty weekly losses, after a series of rate hikes, and the indication of more to come, added to concerns over global economic growth.

By 08:55 ET (12:55 GMT), U.S. crude futures traded 1.7% lower at $68.25 a barrel, while the Brent contract fell 1.6% to $72.95 a barrel. Both contracts are on course for weekly losses of more than 4%.

Large Bank of England rate increase hits sentiment

The Bank of England surprised markets on Thursday by hiking interest rates by a hefty 50 basis points as it battles the highest inflation of all the major economies.

Central banks in Norway and Switzerland also hiked rates, and officials at all of these banks indicated the likelihood of further increases ahead. Add in Fed chief Jerome Powell also pointing to the need for further monetary tightening and fears are growing that this will result in worsening economic conditions, hitting the demand for crude.

U.S. crude inventories shrink

This weakened sentiment overshadowed a fairly constructive report from the Energy Information Administration, which showed that U.S. crude inventories shrank far more than expected in the week to June 16

“In addition, implied U.S. oil demand (total product supplied) hit 20.93MMbbls/d over the week – the highest number seen since December,” said analysts at ING, in a note.

PMI data offers downside risk

The main economic release Friday will be the June purchasing managers’ index surveys, which are expected to show the country’s manufacturing activity stagnating while the services sector still expands.

However, this follows surprisingly soft readings in the euro zone, Japan, and Britain, suggesting downside risk is a possibility.

Baker Hughes rig count due

The week ends, as usual, with rig count numbers from Baker Hughes and CFTC positioning data.

“If it continues to follow the trend seen so far this year, we can expect a further decline in drilling activity,” added ING. “Higher costs have likely contributed to slower drilling activity.”

Additionally, given the move in the oil market over the last reporting week and the increase in open interest, we could see the net speculative long in ICE Brent having grown over the week.