Oil prices rose about 1% on Friday on signs of slowing US production, but both crude oil gauges ended 2023’s longest weekly rally, posting their first weekly loss in 8 weeks, amid growing concerns over global demand growth.
Brent crude futures rose 68 cents, or 0.8%, to $84.80 a barrel, and West Texas Intermediate (WTI) crude futures rose 86 cents, or 1.1%, to $81.25 a barrel.
Both indicators rose on Friday after industry data showed the number of US oil and gas rigs, which is an early indicator of future production, fell for the sixth week in a row.
A drop in US production could exacerbate the supply tightness expected for the rest of this year. These concerns, started by production cuts by the Organization of the Petroleum Exporting Countries and its allies, have helped oil prices soar for seven consecutive weeks since June. In the seven weeks ending Aug. 11, Brent crude rose by about 18% and WTI by 20%.
This week, however, oil prices are down nearly 2% from last week as the worsening real estate crisis in China raised concerns about the country’s slowing economic recovery and curbed investors’ appetite for risk across markets.
Investor concerns are focused on the tension between slowing global growth and still tight global supply. Prices are likely to remain in a range for now, with investors worried about weak data from China should consider weakening demand.
There is also growing concern that the US Federal Reserve has not come to an end to raising interest rates to combat inflation. Higher borrowing costs hinder economic growth and therefore reduce overall oil demand.
Oil benchmarks are further depressed by seasonal demand weakness heading into the autumn.
Meanwhile, there are also those who think that demand in China is likely to continue despite its slowing economy and that oil prices will trade between $75 and $90 per barrel in the coming months.
