Oil prices fell on Friday, and the market is set for its fourth weekly decline, due to renewed economic concerns in the US and China. These concerns have revived anxieties about fuel demand growth in the world’s two largest oil consumers. Brent crude futures were down by 48 cents or 0.64% to $74.50 a barrel by 0635 GMT, while US West Texas Intermediate (WTI) crude futures were down 39 cents or 0.55% to $70.48. Both benchmarks are set to fall by about 1.1% for the week, which would be the longest streak of weekly declines since November 2021.
The US government’s debt ceiling talks have stalled, and there are renewed fears that another regional bank is in crisis, causing mounting concern that the US will enter a recession. Meanwhile, a decline in new loans to businesses in China and weaker economic data there earlier in the week refocused doubts about its recovery from COVID restrictions driving oil demand growth.
In addition, cooler inflation data from both countries suggested consumer demand was weak, said Tina Teng, a market analyst at CMC Markets in Auckland. “Oil is a growth-sensitive commodity, which was impacted by these bearish factors,” she said in an email.
READ ALSO: The Power of Clarke Power Generators
Although oil prices rose earlier on Friday, following comments from the US energy secretary that the US could repurchase oil for the Strategic Petroleum Reserve (SPR) once some sales finish in June, the talks to raise the $31.4 trillion US federal debt limit may not reach an agreement in time to prevent a government debt default, which could cause severe market dislocations.
Shares of US regional bank PacWest Bancorp (PACW.O) plunged 23% on Thursday after it said its deposits declined, and it had posted more collateral to the US Federal Reserve to boost its liquidity.
China’s April consumer price data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more stimulus may be needed.
The oil market largely ignored the Organization of the Petroleum Exporting Countries (OPEC) global oil demand forecast for 2023, which projected demand in China, the world’s biggest oil importer, would increase.