Oil falls for a second week as recession fears grow

West Texas Intermediate (WTI) ended the week below $100 a barrel for the first time since early April after another volatile period of trading marked by escalating concerns about an economic slowdown.

West Texas Intermediate crude for August delivery rose 1.89 percent to $97.59 a barrel, down 6.9 percent from the previous week.

Brent crude for September delivery rose 2.08 percent to $101.16 a barrel, down 5.5 percent weekly.

Photo: Bloomberg

Oil saw another highly volatile week of trading, with prices at one point erasing all of their gains since Russia’s invasion of Ukraine. Earlier this week, a report showed that US inflation rose to its highest levels in four decades while rising US gasoline prices began to weigh on consumption.

“Oil has been volatile, especially to the downside in recent days, due to concerns about the state of the Chinese economy and sharp inflation data from the US this week,” said Rohan Reddy, director of research at Global X Management.

On Friday, prices pared some of their weekly losses as US President Joe Biden’s trip to Saudi Arabia was set to result in no oil supply announcement, and the prospects of the US Federal Reserve raising interest rates by a full percentage point declined.

Crude oil has fallen since early last month amid mounting fears of pushing the US into recession as central banks raise interest rates to combat inflation. At the same time, Libya is resuming its oil exports and production from all its fields after reaching an agreement with the protesters, ending a months-long blockade and halving the production of the member state of the Organization of the Petroleum Exporting Countries (OPEC).

The outbreak of the US dollar and the stronger COVID-19 in China also increased pressure on oil this week. The outbreak of the coronavirus in Shanghai appears to be stabilizing, but authorities are still locking down parts of the city and apartment complexes.

However, data released on Friday showed that Chinese growth is at the slowest pace since the country’s first COVID-19 outbreak.

Despite the drop in futures prices this week, global oil supplies remain tense. This can be seen in the intervals that show a significant premium to the immediately available barrels.

Additional reporting by a team writer

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