Oil recovered amid signs of tight supplies in the physical market, but prices still were headed for a weekly loss on concerns that demand is weakening.
(Bloomberg) — Oil recovered amid signs of tight supplies in the physical market, but prices still were headed for a weekly loss on concerns that demand is weakening.
West Texas Intermediate rallied above $71 a barrel on Friday, gaining in tandem with broader equity markets, after a tumultuous week that saw crude swing in a $13-per-barrel range. Oil is still headed for a third weekly decline — the longest run of losses this year — amid instability among regional US lenders and fears the economy is headed into a recession.
Signs of strength in the physical oil market suggest this week’s selloff — which included a brief, dramatic plunge to the lowest intraday level since 2021 on Thursday — may have been excessive. Shell Plc Chief Executive Officer Wael Sawan said this week the market was actually “pretty tight.”
“There is good reason to be bullish — the trouble is that oil traders are a fickle bunch,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “It will only be a matter of time before OPEC production cuts, lackluster supply from non-OPEC+ and the constructive demand picture in China take center stage once more.”
Oil prices have dropped about 11% this year, showing that a plan by the Organization of Petroleum Exporting Countries and its allies to regain control of the market by cutting output starting this month isn’t yet working. The losses have been driven by concerns that global growth is slowing, potentially hurting energy demand.
In the Middle East, Iraq said it’s yet to strike a deal with Turkey that would allow for the resumption of almost half a million barrels a day of Iraqi oil exports through the country. The standoff between Baghdad and the Kurdistan Regional Government has halted shipments from the port of Ceyhan since late March.
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