Oil prices wallow under $80, set for fourth straight month of losses
Oil prices moved little on Friday after logging steep losses this week, and were set to close a fourth consecutive month in negative territory level as fears of slowing economic growth and demand largely offset tightening supply.
Markets saw little relief as data showed U.S. economic growth slowed more than expected in the first quarter of 2023, amid pressure from high interest rates and inflation. This was coupled with data from China showing continued pressure on the industrial sector, highlighting an uneven economic recovery in the world’s largest crude importer.
Sharp losses in oil markets this week saw prices reverse all gains made earlier in April on the back of a surprise production cut by the Organization of Petroleum Exporting Countries (OPEC), and put crude back below the key $80 level sought by the OPEC.
Brent oil futures rose 0.1% to $78.34 a barrel, while West Texas Intermediate crude futures rose 0.2% to $74.88 a barrel by 22:06 ET (02:06 GMT). Both contracts were set to lose nearly 2% in April, and finish their fourth consecutive month in red.
Crude prices were trading between 3.6% and 4.1% lower for the week.
Stronger-than-expected U.S. inflation and labor market data also ramped up fears of rising U.S. interest rates, especially ahead of a Federal Reserve meeting next week. The central bank is widely expected to hike rates by 25 basis points, with strong inflation and labor market indicators brewing uncertainty over how high rates will go this year.
The prospect of higher interest rates spurred more concerns over a potential recession this year, and ramped up fears that oil demand will deteriorate amid slowing economic growth.
This largely offset positive U.S. inventory data, which showed that stockpiles shrank more than expected in the past week. But demand for refined oil products, chiefly gasoline and distillates, still remained mixed.
The OPEC production cut, which is set to take effect from May, is expected to further tighten supply in the coming months. But the International Energy Agency warned that higher oil prices and tighter markets could destabilize economic growth this year.
While crude imports to China hit a record high in March, fuel demand in the country is still languishing below pre-COVID levels, amid a staggered economic rebound.