Oil prices rose on Friday, but fell for the third week in a row after a sharp drop earlier this week ahead of benchmark rate hikes and on concerns that the US banking crisis will slow the economy and fuel demand.
Brent crude closed $2.80, or 3.9% higher, at $75.30 a barrel. West Texas Intermediate (WTI) settled at $71.34, up $2.78, or 4.1%, after four days of declines that sent the contract to lows last seen in late 2021.
Brent ended the week down about 5.3%, while WTI fell 7.1% even after Friday’s recovery. Both benchmarks fell for three weeks in a row for the first time since November.
The market is trying to reverse the recent decline in prices, mostly triggered by fears of higher interest rates and recession in the banking sector.
There is a big disconnect between oil balances and oil prices. For some analysts, the fundamentals of the physical market are stronger than the futures market suggests. Last week’s selling frenzy happened more of concerns about demand driven by recession risks and tensions in the US banking sector, rather than fundamental indicators.
Some analysts noted that oil demand concerns were exaggerated and they expect an upside price correction in the coming weeks.
Stocks, which often move with oil prices, also rose.
A better-than-expected US jobs report eased some fears of an imminent economic downturn, fueled in part by renewed banking fears. Investors expect the Fed to halt rate hikes at its June policy meeting.
However, factory activity in China unexpectedly contracted in April amid falling orders and weak domestic demand despite an expanding manufacturing sector.
By the way, expectations regarding possible supply cuts at the next meeting of the OPEC+ producer group in June provide some price support.
The number of US oil rigs, an indicator of future production, fell 3 to 588 this week, according to data from Baker Hughes.