Oil rose but the benchmark is still headed for a weekly loss of almost 10 per cent as the outlook for demand faltered amid an uncertain global economic outlook.
West Texas Intermediate advanced above US$69 a barrel on Friday. The US crude benchmark is still down for a third week in its longest run of losses this year. Prices have been battered by concern over instability among regional U.S. lenders and fears the economy will to slide into a recession.
Futures have slumped 13 per cent this year even after a decision by the Organization of Petroleum Exporting Countries and its allies to cut production from this month. Trading was marked by a brief-but-dramatic plunge early Thursday, when prices collapsed to touch the lowest intraday level since 2021.
Signs of strength in the physical oil market suggest the selloff may have been excessive. Shell Plc's Chief Executive Officer Wael Sawan also said this week the market was actually “pretty tight.”
His view is validated by a firming market structure. The prompt spread for global benchmark Brent — the gap between the two nearest contracts — was 19 cents a barrel in backwardation. The figure was 37 cents a barrel in backwardation a month ago.
Prices:
- WTI for June delivery rose 1.5 per cent to US$69.61 a barrel at 10:20 a.m. in London.
- Brent for July settlement advanced 1.6 per cent to US$73.61 a barrel.
- The global benchmark has lost 7.4 per cent this week.
“To be sure, there is good reason to be bullish — the trouble is that oil traders are a fickle bunch,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “It will only be a matter of time before OPEC production cuts, lackluster supply from non-OPEC+ and the constructive demand picture in China take center stage once more.”
In the Middle East, Iraq said it's yet to strike a deal with Ankara that would allow for the resumption of almost half a million barrels a day of Iraqi oil exports via Turkey. The standoff between Baghdad and the Kurdistan Regional Government has halted shipments from the port of Ceyhan since late March. OPEC+ leader Saudi Arabia lowered prices to Asia.
Advertisement