Oil Posts Weekly Decline As Recession Fears Trump Supply Concerns

However, a surge of supply fears contributed to a daily price gain: File Image/Pixabay

Concern over tight global crude supplies contributed to another round of gains for oil prices on Friday, but the massive drops suffered earlier in the week – the outcome of a conflicting concern that a recession would kill demand – resulted in a weekly decline of about 3.4 percent.

Brent rose $2.37, or 2.3 percent, to settle at $107.02 per barrel, while West Texas Intermediate rose $2.06, or 2 percent, to settle at $104.79 per barrel; Brent posted a weekly decline of about 4.1 percent and WTI a loss of 3.4 percent.

Challenging the gloomy outlook of traders on Friday was U.S. non-farm payrolls data showing that more jobs than expected were added to the economy in June; however, critics would presumably argue that this would encourage the Federal Reserve to impose another 75-basis-point rate hike this month.

Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, "The oil market is looking at the jobs report as a double-edged sword: the jobs number was positive from a demand perspective, [but] on the bearish side the market is concerned that if the jobs market is strong, the Fed can be more aggressive with raising rates."

Stephen Brennock, oil analyst at PVM, added, "Economic worries may have roiled oil prices this week, but the market is still flashing bullish signals; this is because supply tightness is more likely to intensify from this point than to ease."

In other oil related news on Friday, further evidence that the international sanctions against Russia may be all for naught was provided by Frank Wisner, former U.S. ambassador to India and an international affairs advisor at Squire Patton Bogg, who suggested that India's drive to buy oil from the former Soviet Union will only escalate as inflation concerns intensify.

He said, "India is getting negative attention for the acquisition of oil by the U.S. and Europe… but India has made a judgment that its national interests dictate — keeping oil prices in the best position that it can is vital for domestic stability and economic interests.

"The availability and price of Russian oil is too attractive."

Early data from Again Capital for June shows India's supply of Russian crude reached nearly 1 million barrels per day (bpd), up from 800,000 bpd in May.