Oil tumbled more than $2 a barrel on Friday and swept up in a wider rout in global equities on fears of a looming recession after central banks in Europe and North America signaled they will continue to fight inflation aggressively.
Brent crude futures were down $2.17, or 2.4%, to $79.04 a barrel, while West Texas Intermediate (WTI) futures were down $1.82, or 2.4%, to $74.29 a barrel.
The US Fed signals further rate hikes in 2023, with hawkish central banks fueling recession woes. European central banks have increased interest rates.
The US Federal Reserve said it will raise interest rates further next year, even as the economy slides into a possible recession. On Thursday, the Bank of England and the European Central Bank also raised interest rates to fight inflation.
There is a case of drifting towards retesting the $70-per-barrel WTI and things can get very rough there.
Both indicators finished the week with a rise with the help of the rallies in the first three days. Brent futures posted their biggest weekly gains since the beginning of October, but those gains followed their worst weekly route since August for the oil benchmark.
Heavy crude oil benchmarks strengthened between Canada and the US. The shutdown of the Keystone oil pipeline continues without a timeline for a reboot. While the cut was expected to be supportive of crude oil prices, it did not contribute to the global benchmarks.
The winter storm cut off North Dakota’s shale oil production.
Oil prices briefly erased some losses after the U.S. Energy Department will repurchase 3 million barrels of domestic crude oil for the Strategic Petroleum Reserve, as being the first purchase since this year’s record 180 million barrel release from the stockpile.
It’s unclear whether this SPR rebuy is a one-time test or the start of a trend.
