Oil prices rose on Friday but were set for a third straight week of losses after a sharp decline the week before on fears of interest rate hikes, US banking sector problems and a slump in Chinese demand.
Brent crude was up $2.88, or 4%, at $75.37 a barrel as of 1:03 p.m. ET (1703 GMT). US West Texas Intermediate It was up $2.85, or 4.2%, at $71.42 after four days of losses, which saw the contract last seen in late 2021.
The Brent benchmark was on track to end the week down around 5.2%, while WTI was set for a 6.6% loss, despite posting their biggest daily percentage gain in a month.
“Crude is trying to reverse a recent decline in prices driven by higher interest rates and fears of a recession mostly in the banking sector,” said Dennis Kiesler, senior vice president of trading at BOK Financial.
Technically, crude oil has been through an exaggerated liquidation selloff, Kiesler said, adding that long positions by hedge funds were the lowest they’ve been in a few years, meaning “a lot of buying power on the sidelines.”
Analysts also said there was a disconnect between oil demand and supply fundamentals and prices.
US oil rig countData from oil services firm Baker Hughes showed an indicator of future production fell this week to 588, the most since March. [RIG/U]
“The result is a large gap between the oil balance and oil prices,” said Stefan Brennock, analyst at PVM oil markets, while analysts at Commerzbank said concerns over oil demand had been exacerbated and that further losses could be expected in the coming weeks. Prices are expected to improve.”
Equities, which often move in tandem with oil prices, also gained momentum.
The better-than-expected jobs report helped ease some fears of an impending economic downturn, partly driven by renewed banking fears.
Meanwhile, factory activity in China unexpectedly eased in April as orders fell and poor domestic demand dragged down the sprawling manufacturing sector.
However, expectations of a possible supply cut at the next meeting of the OPEC producer group in June have provided some price support, said Kelvin Wong, a senior market analyst. OANDA in Singapore,
Investors broadly expect the Fed to hold off on raising rates at its June policy meeting.
The text of this story is published from a wire agency feed without any modification.
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