Oil is poised to end the week below $100 a barrel for the first time since early April after another volatile period of trading marked by escalating concerns over an economic slowdown.
West Texas Intermediate tumbled below $91 a barrel on Thursday, erasing all of the gains seen in the wake of Russia’s invasion of Ukraine in late February, before clawing back some of those losses. Futures edged higher on Friday, but the US benchmark is still down around 8% for the week.
President Joe Biden is scheduled to touch down in Saudi Arabia on Friday as part of a Middle East tour, just days after a report showed US inflation surged to a four-decade high last month, much of it driven by energy costs. China’s economy, meanwhile, grew at the slowest pace since the Wuhan outbreak.
“Oil is trading very much to the beat of Federal policy and the implications it could have on both demand destruction and the US dollar,” said Stephen Innes, managing partner of SPI Asset Management. The market is also watching the increase in virus cases in China and the rest of the world, he added.
A stronger dollar and Covid-19 outbreaks in China have added to pressure on oil this week. Shanghai’s flareup appears to be stabilising, but authorities are still locking down parts of the city and housing compounds as infections rise.
China’s gross domestic product increased 0.4% from a year earlier, the worst performance since the first quarter of 2020, the National Bureau of Statistics said Friday. The economy is paying the price of the Beijing’s Covid Zero policy, which relies on lockdowns and mass testing to stamp out infections.
WTI for August delivery rose 0.6% to $96.36 a barrel on the New York Mercantile Exchange at 12:25 p.m. in Singapore.
Brent for September settlement gained 1% to $100.02 a barrel on the ICE Futures Europe exchange.
Concerns about an economic slowdown have overshadowed a squeeze of the physical oil market, in part due to upended trade flows from Russia. Goldman Sachs Group Inc. said the market is “screaming” tightness and that this week’s selloff has been driven by low liquidity and technical factors.