Oil prices were up on Friday, while recession fears continued to weigh on sentiment, though worries over tight global supplies capped price declines.
U.S. West Texas Intermediate crude rose $2.14, or 2.09%, to $104.32 a barrel, having settled 4.2% higher a day earlier.
Brent crude futures rose $1.91, or 1.83%, to $106.14 a barrel, dropping away after a near 4% rebound on Thursday.Both contracts are set for their second straight weekly loss. Trade this week was marked by a sharp sell-off on Tuesday, when WTI slid 8% and Brent tumbled 9%. Brent’s $10.73 drop was the third biggest for the contract since it started trading in 1988.
“With more rate hikes to come and the U.S. likely in a technical recession, top-side market ambitions could be quite limited,” Stephen Innes, managing director at SPI Asset Management, told Reuters.
“The only reason why oil is not lower is due to self (imposed) and official sanctions on Russian oil,” Innes added.
Western bans on Russian oil and gas output have kept global energy prices buoyed, while other major producers have yet to significantly boost to supplies.
“The sell-off in the commodity markets got a reprieve as traders shrugged off recession fears and turned their focus back to the undersupply issues,” CMC Markets analyst Tina Teng said in a note.
“However, the economic uncertainties remain with the inverted benchmark bond yields pointing to an unavoidable recession, which may continue to weigh on commodity prices.”
Central banks across the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle economic activity and reduce oil demand.
Data from U.S. Energy Information Administration (EIA) showed on Thursday that product supplied, the best proxy for U.S. consumer demand, rose to 20.5 million barrels per day in the most recent week. Overall gasoline and distillate demand over the past four weeks, however, was down a little more than 5% from the year-ago period.
U.S. crude inventories rose by 8.2 million barrels in the week to July 1, EIA data showed, driven by an increase in inventories and as refiners cut output.