Two key crude benchmarks on Friday incurred their third straight weekly price losses, this time on the order of 4 percent, even though they achieved daily gains due to Iraq's stated support of the Organization of the Petroleum Exporting Countries' (OPEC) production cuts.
Iraq's endorsement came on the heels of Saudi Arabia and Russia earlier confirming they would continue their output cuts for the remainder of 2023, and as a result Brent settled up $1.42 to $81.43 per barrel; West Texas Intermediate settled up $1.43 at $77.17.
Demand was said to have almost completely replaced fear of extended Middle East hostilities in the minds of traders, and their concerns were stoked on Friday by the Federal Reserve Bank of San Francisco stating it will not say yet whether the Fed is done raising rates.
Also, the United Kingdom's Office for National Statistics reported that Britain's economy avoided a recession in the July-to-September period but failed to grow.
As such, forecasters chose to be conservative in their outlook, case in point being Capital Economics analysts who stated in a note that, "We are sticking with our forecast of Brent ending both this year and next year at around $85 per barrel."
Royal Bank of Canada analysts including Michael Tran wrote in a note, "The futures market appears oversold….While there may be some short-term, asymmetric upside for crude prices, mounting concerns of slowing demand could be enough to ease the enthusiasm for a significant relief rally over the coming weeks."
Whether oversold or not, U.S. futures slumped about 6.2 percent this week, with diesel being singled out as the latest drag on oil.
Bloomberg observed, "The rapidly souring sentiment caused WTI's prompt spread to flip to a bearish contango structure at certain points on Thursday and Friday, the first time that has happened since July."
In other oil-related news on Friday, Reuters calculated that the price of Urals grade crude oil shipping from Russian ports had retreated to levels close to the $60 G7 price cap: between $63 and $64 for crude shipping from Baltic ports heading for India compared to the $81-$83 per barrel levels seen throughout September and October.