Yahoo Finance Crude oil lower on fears of economic slowdown; weekly gains likely
By Peter Nurse
Investing.com -- Oil prices fell Friday on fears the monetary tightening by a series of central banks will severely hit economic growth in the new year, curbing the demand for crude.
By 09:25 ET (14:25 GMT), U.S. crude futures traded 3.3% lower at $73.58 a barrel, while the Brent contract fell 3.4% to $78.42 a barrel.
This follows losses of around 2% from both benchmarks on Thursday after a series of European central banks, including the European Central Bank and the Bank of England, followed the Federal Reserve by hiking their benchmark interest rates and threatened more tightening ahead with inflation remaining elevated.
This tighter monetary policy is already having an impact on industrial activity, with Eurozone business activity coming in below the 50 mark that separates growth from contraction for the sixth consecutive month.
Adding to the pressure Friday was a report by the Financial Times that indicated that Russia was selling crude to India despite the fact that Indian buyers were complying with the G7-imposed price cap.
This suggests that the Kremlin will have to continue supplying countries that follow the G7’s initiative, despite promises to the contrary, as Putin needs the cash to finance the war in Ukraine.
Moscow said on Friday it was finalizing the last details of how it would respond to the West's imposition of a price cap on Russia's oil exports.
Also weighing are reports of a rising death toll in Beijing from COVID-19, with anecdotal real-time data pointing to sharp drops in the use of roads and public transport as fear of the virus limits activity in the world’s largest importer of crude.
That said, both crude benchmarks are on course to post weekly gains of over 4%, the biggest weekly gains since early October, helped by gains earlier in the week after the Keystone pipeline, supplying the U.S. up to 600,000 barrels a day of Canadian crude, was shut following a leak.
Additionally, issues surrounding supply are likely to persist into the new year, with OPEC cutting its forecasts for U.S. shale oil supply, saying it's unlikely U.S. producers will be able to make up any gaps in output by the producer group.
OPEC reduced its forecast for 2023 growth in U.S. shale to 780,000 barrels per day, while keeping its 2022 forecast unchanged at 590,000 barrels per day, having steadily cut the figure from 880,000 barrels in July.
Baker Hughes’ numbers on operating U.S. oil rigs and CFTC positioning data conclude the week, as usual.
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Crude oil lower on fears of economic slowdown; weekly gains likely
