Oil prices fell nearly 2% on Friday, on expectations that the Gulf of Mexico supply disruptions in the United States will be short-lived, while recession fears cast a shadow over the outlook for demand.
However, futures contracts are still on track for weekly gains.
Brent crude futures fell $1.45, or 1.5 percent, to $98.15 a barrel at the settlement, while West Texas Intermediate crude futures fell $2.25, or 2.4 percent, to $92.09 a barrel at the close. Both crudes rose more than 2% on Thursday.
“We’re pulling back a little bit after yesterday’s big rally,” Price Futures Group analyst Phil Flynn said.
Brent crude rose 3.4% this week after falling 14% last week, amid fears that higher inflation and interest rates will affect economic growth and fuel demand. West Texas Intermediate crude rose 3.7%.
A Louisiana port official said crews are expected to replace a damaged section of the pipeline by the end of Friday, which will allow production to resume on seven US offshore oil platforms in the Gulf of Mexico.
On Thursday, Shell, the largest oil producer in the Gulf of Mexico, said on Thursday it had halted production at three deep-water platforms in the region. The three platforms produce up to 410,000 barrels of oil per day in total.
The market also absorbed the discrepancy between OPEC and the International Energy Agency in their forecasts for demand.
“We are seeing an economic slowdown, but it is not clear if it is as significant a slowdown as some recent forecasts suggest,” said Ole Hansen, director of commodity strategy at Saxo Bank.
“Demand moves like tides, but supply remains the main concern,” he added.
European sanctions on Russian oil are due to be tightened later this year, while a coordinated six-month plan between the United States and other advanced economies to withdraw their energy stocks is due to expire by the end of the year.
On Thursday, OPEC cut its forecast for global oil demand growth in 2022 by 260,000 barrels per day. It now expects demand to increase by 3.1 million barrels per day this year.
This contrasts with the vision of the International Energy Agency, which raised its forecast for demand growth to 2.1 million barrels per day due to the shift to oil instead of gas to generate electricity as a result of high international gas prices.