Oil prices rose in Asian trade on Friday, but are poised for a third straight week of losses after markets witnessed dramatic declines amid fears over a weakening US economy and slowing Chinese demand.
Brent crude rose 60 cents, or 0.8%, at 0545 GMT to $73.10 a barrel, while West Texas Intermediate (WTI) was up 52 cents, or 0.8%, at $69.08 a barrel after four straight days of losses.
For the week, Brent closed down 8.1% while WTI closed down 10.0%. This was a double blow for oil prices.
A surprise contraction in China’s manufacturing activity prevented a reopening of optimism about the oil demand outlook, as fallout from renewed banking woes in the US prompted fears of a wider contagion and deepening recession negotiations.
Concern about a regional banking crisis continued in the US after PacWest Bancorp announced that said it planned to explore strategic options.
Factory activity in China unexpectedly contracted in April as orders fell and weak domestic demand hit the manufacturing sector.
Services activity in China increased throughout April, but the pace of its expansion has slowed, data released on Friday showed.
Yesterday’s sharp intraday decline in WTI crude futures managed to stop at an important major support at $61.85. Expectations about possible supply cuts at the next OPEC+ meeting in June also provided some support to prices.
Traders are looking forward to the US’s April employment data as well as the St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari’s comments on monetary policy.
Investors expect the Fed to pause on rate hikes at its June meeting after the US central bank dropped its rhetoric that it “anticipates” more rate hikes than its policy statement.