Oil prices rose on Friday and offset some of this week’s losses on strong US job growth data, but closed the week at their lowest level since February on concerns that a recession could hit fuel demand.
Brent crude was up 80 cents to $94.92 a barrel, closing 11% lower than last Friday. West Texas Intermediate (WTI) crude rose 47 cents to $89.01 and was down 8% for the week.
U.S. employment growth unexpectedly accelerated in July, with nonfarm payrolls increasing by 528,000 jobs, the U.S. Department of Labor reported. This is a strong economic data supporting the rise of the oil market.
Oil traders are worried about inflation, economic growth and demand this week, but signs of tight supply hold prices strong.
According to energy services company Baker Hughes, the number of oil rigs, an early indicator of future output, fell seven to 598 in the week to Aug. 5, the first weekly decline in 10 weeks
Recession concerns intensified after the Bank of England raised interest rates at the highest rate since 1995 on Thursday.
Frankly, everyone is taking the recession threat much more seriously because it’s still a very tight market and there are manufacturers who don’t have the capacity to change it. The market structure known as backwardation dominates, early delivery prices are higher than in the coming months.
The OPEC+ producer group this week agreed to increase its oil production target by 100,000 barrels per day (bpd) in September, but this was one of the smallest increases since such quotas were introduced in 1982, according to OPEC data.
The European Union’s sanctions banning the importation of Russian crude oil and petroleum products by sea will come into effect on December 5. With the EU halting its imports from Russia by sea, there are important question marks about whether Middle Eastern producers will turn to Europe again in order to fill the gap.
The issue of how will the oil sanctions policy against Russian product proceed will be one of the most important issues to follow for the rest of the year.
