Oil futures struggled for traction on Friday, with U.S. and global benchmark prices looking likely to end a streak of weekly gains, as investors juggled concerns over demand.
West Texas Intermediate crude for July delivery
fell $5.45, or 4.6%, to $112.14 a barrel on the New York Mercantile Exchange. Based on the front-month contract, trades around 7% lower for the week following seven weekly gains in a row.
August Brent crude
the global benchmark, was $4.33 lower, or 3.6%, to $115.48 a barrel on ICE Futures Europe. Prices were eyeing a weekly loss of more than 5%, set to break a string of four weekly gains.
Back on Nymex, July gasoline
fell 6.4% to $3.71 a gallon, while July heating oil
fell 3.4% to $4.4158 a gallon.
July natural gas
fell 2.7% to $7.261 per million British thermal units. Prices on Tuesday had settled at a five-week low.
Oil prices have struggled this week as investors backed away from perceived riskier assets in the wake of a Federal Reserve interest rate hike. Fears that the economy could tip into recession have weighed on commodities and other perceived riskier assets.
The Fed was followed by a bigger-than-expected hike from the Swiss National Bank, and Bank of England also raised interest rates.
Read: ‘The opposite of policy coordination’: Swiss National Bank and Bank of England lift interest rates following Fed hikes
“While many see aggressive rate increases as key to curtailing rampant inflation, accelerated hikes also raise the risk of pushing the broader economy into recession as higher rates curb growth,” said Robbie Fraser, manager, global research & analytics at Schneider Electric. “For crude, that’s keeping demand concerns in focus, particularly as consumers in many cases are facing record prices at the pump in the early part of the summer driving season.”
The Biden administration has been “increasingly critical of crude producers and refiners as prices continue ticking higher, with recent reports suggesting the U.S. could look to cap the exports of products like diesel and gasoline,” said Fraser, in a daily note. However, “ultimately, lower prices will likely need to come from the usual fundamental factors rather than temporary legislation.”
Crude prices rebounded Thursday on news that the U.S. had hit Iran with fresh sanctions.
But investors can’t shake worries over demand, with prolonged lockdowns in China the main catalyst, noted Saxo Bank strategists. “On top of that the short-term technical outlook has weakened following several failed attempts to break higher, but given the tight supply outlook, highlighted by the IEA earlier in the week,” they said.
Read: Russia again cuts natural gas exports to European countries
The International Energy Agency said earlier this week that it expects supply growth to lag behind demand, pushing an already tight market witnessing soaring prices into a 500,000-barrel-a-day deficit.