Oil falls more than 2%, but is heading for its biggest weekly rise since October

Oil fell on Friday as the market weighed the consequences of central bank interest rate hikes, but was poised to post its biggest weekly gains in 10 weeks on worries about supply disruptions and hopes of a recovery. of demand in China.

crude oil futures Brent it was down $1.80, or 2.2%, to $79.41 a barrel by 09:40 GMT. oil futures West Texas Intermediate they yielded $1.87, or 2.5%, to $74.24.

Both benchmarks fell 2% in the previous session due to the strengthening of the dollar and the rise in interest rates by the European central banks.

On Wednesday, the Federal Reserve indicated that it will continue to raise interest rates next year, even as the economy heads toward a possible recession. On Thursday, the Bank of England and the European Central Bank raised interest rates to fight inflation.

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But oil benchmarks are on track for their biggest weekly gains since early October, with the market buoyed by possible supply shortages after Canada’s TC Energy Corp shut down its Keystone pipeline after a leak and the prospect that the demand increases in 2023.

The International Energy Agency (IEA) expects China’s oil demand growth to pick up next year by nearly 1 million barrels per day (bpd) after contracting in 2022. The agency raised its estimate for oil demand growth global oil demand in 2023 to 1.7 million barrels per day.

JPMorgan Commodity Research analysts also expect the United States to start replenishing its strategic oil reserves in the first quarter of 2023.

Based on our quarterly projections, this window (for the buyback) will open in 1Q23 with an initial purchase of around 60 million barrels during 1H23,” they said.

The oil market, however, remains concerned about downward pressures, including a slow recovery in Chinese demand due to rising Covid-19 infections and a glut in the West Suez market.