Oil heads for weekly loss as recession fears outweigh tight supply

The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

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  • Brent and WTI are heading for a weekly decline, after falling in June
  • Supply tightness is more likely to intensify from here -PVM
  • Coming soon: U.S. jobs data for June

LONDON, July 8 (Reuters) – Oil rose in volatile trade on Friday but was still heading for a weekly decline as concerns over a possible drop in demand due to the recession outweighed tight global supply.

Central banks are raising interest rates to tame inflation, raising fears that rising borrowing costs could stifle growth, while massive COVID-19 testing in Shanghai this week fueled fears potential blockages that could also affect oil demand. Read more

Brent crude rose 35 cents, or 0.3%, to $105.00 a barrel by 1045 GMT and U.S. West Texas Intermediate crude gained 19 cents, or 0.2%, to $102.92.

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Both benchmarks were expected to register weekly declines, following the first monthly decline since November. Prices had fallen on Tuesday, when Brent’s $10.73 drop was the third-biggest drop in the contract since it began trading in 1988.

“With more rate hikes to come and the U.S. likely in a technical recession, ambitions at the top of the market could be quite limited,” Stephen Innes, managing director of SPI Asset Management, told Reuters.

The focus on Friday will be on the latest U.S. jobs data, which is expected to show nonfarm payrolls rose by 268,000 in June. Read more

However, oil prices soared in the first half of the year. Brent crude neared a record high of $147 after Russia launched its invasion of Ukraine in February, adding to supply concerns that some analysts expect to escalate.

“Economic concerns may have jolted oil prices this week, but the market is still sending bullish signals. Indeed, supply tension is more likely to intensify from this point than escalate. mitigate,” said Stephen Brennock of oil broker PVM.

Western bans on Russian oil exports have kept prices buoyant and triggered a redirection of flows as the Organization of the Petroleum Exporting Countries (OPEC) and its allies struggle to meet promised production increases.

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Reporting by Alex Lawler Additional reporting by Florence Tan and Jeslyn Lerh Editing by David Goodman

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