Oil observed a second consecutive weekly drop, its second-longest losing run this year, on concern that aggressive hikes in US interest rates would hamper fuel demand and impede economic growth.
Currently, Brent crude is down $1.10, or 1.07 percent, at $102.1 a barrel. The US West Texas Intermediate (WTI) crude lost $1.21, or 1.28 percent, to sit at $93.47 per barrel after markets resumed trade in red on Monday.
Overall, WTI has been battered over the last two days as data indicated that US oil demand had plummeted roughly 8 percent year on year owing to record pump prices. In contrast, signals of robust demand in Asia propelled the Brent benchmark to its first weekly increase in six weeks.
Crude prices have been volatile in recent weeks as traders desperately try to balance out the likelihood of further interest rate hikes, which could limit economic activity and reduce fuel demand, with tight supply caused by disruptions in the trading of Russian oil due to Western sanctions imposed since Moscow’s invasion of Ukraine.
According to Reuters, US Federal Reserve officials expect the central bank to raise interest rates by 75 basis points or 0.75 percent in the next few days. The global economy looks increasingly likely on the verge of a severe recession, just as central banks aggressively reverse ultra-loose monetary policies adopted during the pandemic to support growth.
On the supply side, Libya’s National Oil Corporation (NOC) stated in an early Saturday statement that it intends to restore output to 1.2 million barrels per day (bpd) within two weeks.
The European Union said last week that it would allow Russian state-owned enterprises to export oil to other nations as part of an adjustment on sanctions agreed upon by member states last week to reduce the overall impact on global energy security. However, Moscow doesn’t look like it will cave in to the pressure as Russian Central Bank Governor, Elvira Nabiullina, said earlier that Russia would not provide oil to nations that chose to put a “price cap” on its oil.
