Oil prices rallied briefly on Friday as a major crude oil pipeline from Canada to the US closed. However, both benchmarks are headed for a weekly decline amid concerns about slowing global demand growth.
Brent crude futures, after falling 1.3% on Thursday, were up 58 cents, or 0.76%, as of 0716 GMT to $76.73.
West Texas Intermediate (WTI) crude rose 52 cents, or 0.73%, to $71.98 a barrel, after falling 0.8% in the previous session.
News of an accident that shut down Canada TC Energy’s Keystone pipeline to the US sparked a brief rally on Thursday, but prices eased as the market thought the outage would be short-lived.
More than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude oil spills in the United States in nearly a decade.
Previous spill-related outages have typically cleared up in about two weeks, but are likely to take longer given the most recent outage involved spilling into a creek.
Oil prices are poised to record their biggest weekly drop in recent months as traders expect it will take time for China to ease its COVID controls.
Economists say rising infections will likely continue to weigh on China’s economic growth for the next few months, with a recovery only coming in 2023.
The market is not convincing that crude has bottomed, despite the strong loss streak in the last few sessions. Despite two major crude oil supply cuts, Thursday’s price drop was somewhat surprising.
The business activity contraction is likely getting worse. It is obvious that the market players continue to sell to secure their business.
The US economy is entering a short and shallow recession next year, according to economists who unanimously expected the US Federal Reserve to raise interest rates by a smaller 50 basis points on December 14.
While the eurozone economy almost certainly being in recession, as it battles inflation running at five times its target, the European Central Bank will likely raise its deposit rate by 50 basis points to 2% next week.
