By Peter Nurse
Investing.com — Oil prices traded higher Friday, helped by continued tight supply, but the market is still heading for a second weekly fall on fears that tight monetary policy will push the global economy into recession.
By 08:45 AM ET (1245 GMT), U.S. crude futures traded 2.3% higher at $106.66 a barrel, but still on course for a weekly loss of around 3%, while the Brent contract rose 2.1% to $112.34 a barrel, set to lose 1% this week.
U.S. Gasoline RBOB Futures were up 1% at $3.8041 a gallon.
The crude market has been helped by comments from the Libyan oil minister, who said late Thursday that the National Oil Corporation chairman was withholding production data from him.
He had said earlier in the week that Libya’s oil production has risen in the past week to around 700,000 to 800,000 barrels a day, but these figures must now be in doubt as an increase in political tension and protests at energy fields and ports has severely curtailed production in this country, home of Africa’s largest oil reserves.
That said, the crude market is on course for its second consecutive losing week amid concerns that interest rate hikes by a number of central banks, and the Federal Reserve in particular, will severely limit global economic activity.
Fed Chair Jerome Powell said on Thursday the central bank’s focus on curbing inflation was “unconditional”, suggesting more interest rate hikes ahead, which he added raised the “possibility” of recession.
“The move lower in oil appears to be almost exclusively driven by macro influences, while oil fundamentals still remain supportive,” said analysts at ING, in a note. “We just have to look at the time spreads, which have not followed the flat price lower over the week…This suggests that there is tightness in the market right now and we would expect this to only grow as we lose more Russian supply.”
Next week sees the latest meeting of the Organization of Petroleum Exporting Countries and allies to discuss the group’s production levels.
The cartel, known as OPEC+, is widely expected to stick to its plan to boost output by 648,000 barrels a day in July and by the same amount in August, despite the plans of U.S. President Joe Biden to visit Saudi Arabia, the de facto leader of the group, to plead the case for lower crude prices.
Also likely to emerge next week will be the delayed inventory data from the U.S. Energy Information Administration, after the official body was unable to publish this week’s figures on Thursday due to technical problems.
“This delay comes at a crucial time for the market when there are plenty of concerns over the tightness in refined product markets,” ING added.