Oil rises on market tight supply and recession concerns
Oil prices rose slightly on Friday in volatile Asian trade, reversing previous losses as the market weighed recession fears against tight global supply concerns.
Brent crude futures rose 48 cents, or 0.5%, to $105.13 a barrel as of 0630 GMT, after gaining nearly 4% on Thursday. West Texas Intermediate (WTI) crude which had been up 4.2% yesterday, rose 3 cents to $102.76 a barrel.
However, both contracts are poised for their second consecutive weekly losses. Trade this week was noted by a sharp sell-off on Tuesday when WTI slid 8% and Brent tumbled 9%.
Brent's $10.73 drop was the third-largest drop the contract had witnessed since it was traded in 1988.
The US's further rate hikes and a technical recession are putting pressure on prices. Considering current factors, the main reason why oil did not fall is due to the official sanctions on Russian oil imposed by the West. Western bans on Russia's oil and gas production have kept global energy prices buoyant, while other major producers have yet to significantly increase supply.
Sales in the commodity markets took some relief as traders got used to recession fears and focused on re-supply issues. However, economic uncertainties persist, with inverted benchmark bond yields signaling an inevitable recession that could continue to put pressure on commodity prices.
Central banks around the world are raising interest rates to rein in inflation, raising fears that rising borrowing costs could stifle economic activity and stifle oil demand.
Data from the US Energy Information Administration (EIA) on Thursday showed that the product supplied, representative of US consumer demand, rose to 20.5 million barrels per day in the most recent week. However, overall gasoline and distillate demand over the past four weeks has fallen by just over 5% year-on-year.
U.S. crude inventories increased by 8.2 million barrels in the week of July 1, as inventories increased and refineries cut production, EIA data showed.
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