Oil prices fell – today, Friday – at a time when the market is assessing the repercussions of raising central banks interest rates, but crude is about to achieve the largest weekly gain in 10 weeks, amid fears of supply disruptions and hopes for a recovery in Chinese demand.
And by 07:28 GMT, Brent crude futures fell 0.2% to $81.07 a barrel, before continuing to decline in morning trading.
US West Texas Intermediate crude futures also fell 0.3% to $75.9 a barrel, before deepening its losses.
The two benchmarks fell 2% in the previous session, as the dollar rose and European central banks raised interest rates.
“More tightening monetary policy is already having an impact on industrial activity. The prospect of further tightening following comments from policymakers weighed on sentiment,” analysts from ANZ Research said in a note today.
Scarcity of supply
The US Federal Reserve (the central bank) has signaled that it will raise interest rates further next year, even as the economy slides into a potential recession.
However, the two crude oil may be heading towards recording the largest weekly gain since early October, with the sentiment of dealers receiving support from a lack of supply after the Canadian company “TC Energy” closed the Keystone pipeline after a leakage, in addition to the expectation of an increase in demand in 2023.
The International Energy Agency expects Chinese demand to recover next year, after its contraction in 2022, to 400,000 barrels per day. The agency raised its forecast for oil demand growth in 2023 to 1.7 million barrels per day.
And the Organization of the Petroleum Exporting Countries (OPEC) announced – on Tuesday – its commitment to its expectations for global demand growth by 2.55 million barrels per day this year, and 2.25 million barrels per day in 2023 after multiple cuts, saying that although the economic slowdown is “quite clear”, there is a potential rise stemming from Among them is the easing of China’s “zero Covid” policy.