Oil prices fell on Friday, achieving their fourth weekly decline, with renewed economic concerns in the United States and China about the growth in fuel demand in the two largest oil consuming countries in the world.
Brent crude futures were down 48 cents, or 0.64%, at $74.50 a barrel by 0635 GMT. US West Texas Intermediate crude futures fell 39 cents, or 0.55%, to $70.48.
Both benchmarks are set to fall around 1.1% for the week, the longest streak of weekly declines since November 2021.
With talks over the US government’s debt ceiling stalled and fears renewed that another regional bank is in crisis, there is growing concern that the US is entering a recession. The decline in new loans to companies in China and weak economic data there earlier in the week refocused doubts about its recovery from Covid restrictions that led to growth in oil demand.
In addition, cooler inflation data from both countries indicated that consumer demand was soft, said Tina Teng, market analyst at CMC Markit in Auckland. “Oil is a growth-sensitive commodity that has been affected by these downside factors,” she said in an e-mail.
The price rose earlier on Friday, after falling in the previous two sessions, on some demand expectations following comments from the US Secretary of Energy that the US may buy back oil for the Strategic Petroleum Reserve once some sales end in June.
The US government has said it will buy oil when prices are stable at or below $67 to $72 a barrel. However, talks to raise the US federal debt limit of $31.4 trillion may not reach an agreement in time to prevent a default on government debt, which could cause severe market turmoil.
Shares in U.S. regional bank Backwest Bancorp tumbled 23 percent on Thursday after it said its deposits had fallen and posted more guarantees to the U.S. Federal Reserve to boost liquidity. China’s April consumer price data rose at a slower pace and missed expectations, while factory gate contraction deepened, suggesting more stimulus may be needed.
The oil market has largely ignored the Organization of the Petroleum Exporting Countries (OPEC) forecast for global oil demand for 2023, which predicted increased demand in China, the world’s largest oil importer.
Provincial officials said Canada’s main oil-producing region in northeastern Alberta faces an increased risk of wildfires as temperatures rise over the weekend. This year’s wildfires have largely spared the oil sands of northeastern Alberta, but have ravaged the western and northwestern parts of the province, forcing the evacuation of up to 30,000 people and curtailing natural gas production.
That pattern threatens to shift this weekend with warmer temperatures and drier conditions across northern Alberta, Kristi Tucker, the wildfire information officer, told a news conference Thursday. boycott so far. “But that could definitely change because they will see similar conditions to other parts of the north of the province.”
--This year’s wildfires were far less destructive than the ones that ravaged Canada’s oil sands seven years ago. The 2016 fires halted more than a million barrels of crude oil production per day and destroyed entire sections of Fort McMurray, the main city in the region.
Showers of rain helped firefighters control the latest series of fires in recent days. Officials said the number of wildfires had fallen to 82 from more than 100 earlier this week. A total of 23 fires are still considered out of control. But Fort McMurray is expected to see temperatures as high as 32 degrees Celsius (90 Fahrenheit) on Sunday, according to Environment Canada.
Black economic forecasts
Investing.com said, Oil is struggling to recover as the economic outlook darkens, as oil prices fell further on Friday after erasing all of their gains for the week, as disappointing economic signals from China and concerns about a possible recession in the United States cast doubt on the demand for crude oil. this year.
Crude oil prices posted heavy losses over the past two sessions as weak trade data and inflation from China fueled market questions about the pace of the country’s post-COVID economic recovery. The weak data greatly outweighed expectations by the Organization of the Petroleum Exporting Countries (OPEC) that China would push oil demand to record levels this year. OPEC slightly raised its forecast for oil demand this year in its monthly report.
Signs of a slowdown in the US labor market, along with renewed fears of a banking crisis in the country, also affected the oil markets. Broader market sentiment remained tense amid ongoing discussions about raising the US debt limit, with the June 1 deadline approaching for a US default. But media reports showed that a Friday meeting between President Joe Biden and Republican policymakers appears to have been pushed back to next week.
The sharp recovery in the dollar also affected the oil markets, as evidence of persistent inflation in the US has largely dampened expectations of any interest rate cuts by the Federal Reserve this year. Knowing that the strengthening of the dollar makes crude oil more expensive for international buyers, which weakens demand.
US inventory data provided mixed signals to the markets this week, as continued drawdowns from the Strategic Petroleum Reserve led to unexpectedly high inventories over the past week. But sharp declines in gasoline and distillate inventories indicate that fuel demand in the United States is picking up as the summer season approaches. However, this only provides a limited price hike.
Speculation about a possible replenishment of the Strategic Petroleum Reserve provided some support for oil prices this week, although the White House has so far given little indication of when to start buying crude oil, at a time when data revealed that oil producers in the Middle East are raising export prices for their crude to European buyers. Those who hold back Russian oil, and cannot get it. Usually, heavy ores with high sulfur content – sour ores – are cheaper because refining them is a more complex matter. However, the refining business does not follow this unwavering logic. Refineries are calibrated to work with certain types of oil, and many European refineries are calibrated to work with Russia’s Urals crude – a medium sour grade.
Meanwhile, India and China have access to discounted Russian crude – in all grades – and also cheap Middle East crude, benefiting from Europe’s questionable international policies and from internal competition in OPEC+. The EU may want to quickly replace its GDP with something else before the differences between its own GDP and those of China and India become too severe.
