By Barani Krishnan

Investing.com – Oil prices dropped on Friday due to U.S. Inflation at over 40-years highs. That suggested more aggressive rate increases that sent the dollar flying. It also made commodity prices in the greenback (including crude) more costly for currency non-holders.

However, the price of a barrel was still well above $120. This resulted in U.S. crude’s seventh consecutive weekly gain and global benchmark Brent’s fourth weekly win.

The London-traded fell 91 cents or 0.8% to $122.16 per barrel at 2:40 ET (18:40 GMT).  The week ended with a 1.8% gain and an average of 9% for a period of four weeks.

Brent was at $124.38, its highest point since March 9th, 2014 when Brent touched $130.  This year, the global crude benchmark has increased 57%.

The New York-traded benchmark U.S. crude oil traded at $120.67 a barrel. This was 84 cents or 0.7% lower than Wednesday’s $123.15 high. WTI is currently up over 60% for the year.

Friday’s slide in Brent and WTI came as the , which pits the greenback against six other major currencies, hit a three-week high of 104.23. 

The dollar jumped after the Labor Department reported that the grew 8.6% during the year to May, expanding by its fastest rate since 1981, as the cost of virtually everything — from food to fuel, shelter and clothing — rose again last month.

GasBuddy’s data shows that the average price for gasoline at the pump was $5.50 per gallon, which is the highest price ever seen in the United States.

In a separate report, the University of Michigan revealed that their closely-followed survey reached a record low in June. The result is due to Americans growing increasingly disillusioned at how inflation continues to take a greater share of each paycheck.

U.S. bonds yields hit an all-time high of 3.177% one month ago, driven by the returns on the. It suggests the Federal Reserve might be aggressive in raising rates for the remainder of the year, to help bring inflation within 2% of its target. If necessary, the central bank stated it would slow down economic activity to meet its goals.

Analysts say the Fed might have a tough task ahead as oil and gasoline prices don’t seem to be coming down enough to stop inflation in its tracks.

“The oil market is still very tight and the eventual weaker U.S. consumer won’t really take effect until closer to the end of the year,” said Ed Moya, analyst at online trading platform OANDA. “Some traders are entering de-risking mode as prospects for the economy continue to dim, but no one really wants to abandon the best trade of the year, which is oil and energy stocks.”  ​