Oil advanced for a second session but remains on track for a large weekly loss as demand concerns continue to hang over the market.
(Bloomberg) — Oil advanced for a second session but remains on track for a large weekly loss as demand concerns continue to hang over the market.
West Texas Intermediate futures rose above $74 a barrel on Friday, trimming the weekly decline to around 7%. Saudi Arabia reduced prices for crude sold to Asia and Europe in February, signaling concerns over the near-term outlook. China is battling a surge in virus cases after Covid-19 restrictions were lifted, although mobility is set to rise as the Lunar New Year holidays approach.
See also: Why China’s Reopening Isn’t Boosting Global Oil Markets Yet
“Broader financial markets started 2023 in a dark mood over the global economy and oil has become caught up in it,” said Vandana Hari, founder of Vanda Insights. Bargain hunting is helping to drive prices higher, she added.
The lackluster start to the year has been exacerbated by a lack of liquidity, leaving oil futures prone to wild price swings. The International Monetary Fund warned this week that a third of the global economy could enter a recession in 2023, while Federal Reserve Bank of St. Louis President James Bullard signaled that US interest rates weren’t yet sufficiently restrictive.
Investors are watching US non-farm payroll data due later Friday, which will provide clues on the path forward for monetary tightening.
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US crude and refined product exports rose by 1.33 million barrels last week, according to government data. Commercial crude stockpiles climbed by 1.69 million barrels, while gasoline inventories fell.
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