Oil posted a weekly decline as volatile trading and recession fears overshadowed a fundamentally tight supply picture.
West Texas Intermediate crude for August delivery on Friday rose to settle over US$104 a barrel, but it was not enough to stave off a weekly decline of 3.4 percent.
The September contract for global benchmark Brent crude on Friday gained 2.3 percent to settle at US%107.02 a barrel, down 4 percent for the week.
Investors remain concerned that restrictive US monetary policy could herald a recession. Still, physical signals remain robust, especially in the US, where the prompt timespread, which closely reflects the supply and demand balances at the country’s biggest storage hub in Cushing, Oklahoma, surged to the highest level since March earlier in the week.
“We believe it is premature for commodities to succumb to recession concerns when the global economy is still growing and markets remain in deficit on strong demand,” Goldman Sachs Group Inc analysts, including Jeffrey Currie, said in a note to clients.
Crude’s volatile trading means that it is well down from last month’s high, but still up more than 35 percent this year following Russia’s invasion of Ukraine.
The complex market outlook has spurred banks to offer starkly different scenarios for prices, with Goldman Sachs remaining broadly bullish, while Citigroup Inc has said the commodity is at risk of a significant tumble.
In welcome news for US President Joe Biden, retail gasoline prices in the US saw the biggest single-day drop in more than a decade.
Soaring pump prices have become a political problem for the White House and on Friday, Biden acknowledged that “we are making significant progress,” but there is still work to do to rein in costs.
Meanwhile, in the Permian Basin’s hub in Midland, Texas, inventories are about 600,000 barrels lower than last year, according to Geoffrey Craig, global energy analyst at Ursa Space.
Outside of the US, a key export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down.
In China, investors are tracking efforts by Beijing to buttress growth after COVID-19 lockdowns hurt the economy and energy consumption in the first half.
The Chinese Ministry of Finance might allow local governments to sell 1.5 trillion yuan (US$224 billion) of special bonds for infrastructure funding.
Additional reporting by staff writer
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