Oil's Two Month Winning Streak Ends Amid Heightened Fears Of Demand Decline

But once again, an equal amount of analyst think demand will be sustained: File Image/Pixabay

Unsurprisingly given the losses incurred over the past few sessions, oil prices on Friday logged  their first weekly loss in two months, with sentiment swaying between positive reaction to slowing U.S. output and concern about global demand growth.

West Texas Intermediate settled up 86 cents, or 1.1 percent, at $81.25 per barrel, and Brent settled up 68 cents, or 0.8 percent, at $84.80 per barrel, after data from Baker Hughes revealed that the U.S. oil and natural gas rig count fell for the sixth straight week, possibly exacerbating tightening supplies.

Oil prices for the week dropped about 2 percent from last week.

As in the previous session, analysts failed to provide any clarity about the market moving forward: Rob Haworth, senior portfolio manager at U.S. Bank Asset Management, said, "Prices are likely to remain range-bound for now" and he added that investors are questioning demand due to weak economic data from China.

By contrast, Jay Hatfield, CEO of Infrastructure Capital Management, said he expects demand to hold up despite and predicted oil prices would trade between $75 to $90 per barrel in the fall.

Still, for a community obsessed with macroeconomics, Friday also saw investors reportedly resuming 
fears that Federal Reserve policymakers may be plotting another round of interest rate hikes to combat inflation; officials will gather next week in Wyoming to presumably discuss the matter.

This compelled Michael Kern, an analyst at Oilprice.com, to state, "While backwardation in oil markets has reached the widest level since April and inventories are declining globally, the upside for crude oil prices is no longer as evident as it was a couple of weeks ago."

In other oil related news on Friday, people with knowledge of the matter told media that daily primary processing rates for refineries in Russia averaged 5.63 million barrels over Aug. 1-16, almost 10,000 barrels per day higher than the average for the most of July.

Mikhail Turukalov, an independent U.S.-based oil analyst, remarked, "It's difficult to assess whether monthly growth of refinery throughput will keep through August: Rosneft's Angarsk refinery started planned works Aug. 15 and if its Ryazan refinery begins maintenance Aug. 20, then Russia's processing rates will be lower this month compared with July."

This is the final month before the former Soviet Union cuts subsidies for domestic supplies of gasoline and diesel.