Oil Makes Daily Gains But Incurs Second Weekly Decline Amid Demand Worries

Meanwhile, G-7 wants a heavier buy-in before following through on gas cap: File Image/Pixabay

Another tumultuous see-saw week of oil trading ended with prices on Friday gaining about 4 percent on the strength of on-going fears about threatened supply cuts by Russia to Europe; however, the gains were limited by worries about what China's Covid curbs will do to demand.

Brent rose $3.69, or 4.1 percent, to settle at $92.84 per barrel, while West Texas Intermediate rose $3.25, or 3.9 percent, to settle at $86.79 per barrel – not enough to prevent the commodity from incurring a second weekly decline of 0.1 percent for WTI and 0.2 percent for Brent.

Ed Moya, senior market analyst at Oanda, addressed two other factors that influenced oil traders on Friday: "The broader market rally is helping push crude prices higher; China's inflation numbers were promising and that is giving hope that central banks won't have to be as aggressive with tightening over the next few months."

Moya was referring to the S&P 500 on Friday jumping 1.5 percent and the Dow Jones Industrial Average soaring 377 points, or about 1.2 percent, accompanied by the Nasdaq Composite climbing 2.1 percent.

In other oil news on Friday, a U.S. Department of Energy official announced that the White House wouldn't – despite reports to the contrary from energy secretary Jennifer Granholm on Thursday – release any crude from Strategic Petroleum Reserves beyond the 180 million barrels that president Joe Biden announced earlier this year.

This caused Phil Flynn, senior market analyst at Price Futures Group Inc., to remark, "Looks like a lot of the fears the market had previously have gone away."

Meanwhile, in the ongoing saga of the European Union's intent to impose a cap on Russian oil, one European official on Friday told that G-7 countries are still trying to recruit more countries before they engage in more detailed discussions about the policy's specifics: "The coalition has to be broader, and this is the diplomatic phase [negotiators] are entering into."

China, India, and Turkey, the key importers of Russian oil, have not yet revealed whether they will support the price cap or negotiate their own deals with Russia, and their participation will influence how much leverage the West will have in setting prices.

As per normal, Russia continued to warn against such initiatives, with Maria Zakharova, spokeswoman for the Russian Foreign Ministry, pointing out that "The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet."