Oil slumps as slowdown concerns limit price gains
Oil prices fell on Friday after two days of gains as market participants weighed in on tighter supply expectations towards the end of the year, amid concerns about a global economic slowdown that could dampen fuel demand.
Brent crude futures were down 36 cents, or 0.4%, to $96.23 a barrel as of 0309 GMT after gaining 3.1% on Thursday. West Texas Intermediate (WTI) crude was at $90.29/barrel, down 21 cents, or 0.2%, after gaining 2.7% in the previous session.
Still, benchmark contracts are on the way to weekly losses of around 1.5%.
While weekly bullish data in the US support the optimism about the recovery in fuel demand in the near term, the ongoing fears of recession and the possible production increase of OPEC+ will limit the upward movement of oil prices.
U.S. crude stockpiles have fallen sharply as the country exported a record 5 million barrels per day in the last week, and oil companies seeking to replace crude oil that has been blocked from Russia have seen strong demand from European countries.
U.S. oil refiners aim to run full-bore, ignoring recession fears. They plan to continue operating near full throttle this quarter to keep crude supply comfortable, as refiners put aside concerns about a recession and falling retail prices to provide more fuel, according to executives and forecasts.
An increase in US fuel production could partially offset lower oil product exports from China this year, as Beijing prioritizes the domestic market to curb domestic fuel inflation.
On the supply issue, Haitham Al Ghais, the new secretary-general of the Organization of Petroleum Exporting Countries, said policymakers, lawmakers, and inadequate oil and gas sector investments, not his own group, are responsible for the high energy prices.
The group, known as OPEC+, will meet with allies like Russia on September 5 to adjust production. Al Ghais said OPEC is willing to ensure that Russia remains part of the OPEC+ oil production agreement after 2022.
In a sign that supply is improving, the price gap between fast and second-month Brent futures has narrowed by around $5 per barrel from late July.
Record US crude oil exports, the resumption of production by Libya, and continued exports from Russia and Iran have eased the global supply shortage.
He said that Russia expects production and exports to increase by the end of 2025, while revenue from energy exports will increase by 38% this year, in part due to higher oil export volumes.
Meanwhile, Iran increased its oil exports in June and July and said it could increase it further this month, offering a deeper discount for its main buyer, China, than Russian crude.
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