Oil prices fell on Friday and are poised for a fourth weekly drop as renewed economic concerns in the US and China have fueled concerns about fuel demand growth in the world’s two largest oil consumers.
Brent crude futures were down 37 cents, or 0.49%, to $74.61 a barrel as of 0510 GMT. West Texas Intermediate (WTI) crude futures were down 30 cents, or 0.42%, to $70.57.
Both benchmarks are on the way down around 1% for the week, which would be the longest streak of weekly declines since November 2021.
With talks on the US government debt ceiling stalled and fears resurging that another regional bank is in crisis, there are growing concerns that the US is going into recession. The decline in new loans to businesses in China and weak economic data earlier in the week have rekindled doubts about oil demand growth.
In addition, cold inflation data from both countries show that consumer demand is weak.
Oil is a growth-sensitive commodity that is affected by all these factors.
After falling in the previous two sessions, the price rallied early Friday on expectations of demand after the US energy secretary’s comments in June that the US could buy oil for the Strategic Petroleum Reserve (SPR).
The US government says it will buy oil if prices are between $67 and $72 a barrel or below.
However, talks to increase the US$31.4 trillion US federal debt limit may not reach a timely agreement without leading to a government debt default that could cause serious market turmoil.
And shares of PacWest Bancorp, a US regional bank, fell 23% on Thursday after it said its deposits were falling and it had given the Federal Reserve more collateral to boost its liquidity.
China’s April consumer price data rose slowly and failed to meet expectations, while factory gate deflation deepened, suggesting more stimulus may be needed.
The oil market has largely ignored the Organization of the Petroleum Exporting Countries (OPEC) 2023 global oil demand forecast, which predicts that demand in China, the world’s largest oil importer, will increase.
