© Reuters. FILE PHOTO: The smokestacks of the Total Grandpuits refinery are seen after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
NEW YORK (Reuters) – Oil prices rose about 2 percent in volatile trade on Friday, but were still set for weekly losses as global fuel supplies remained tight, as investors fretted about a potential recession-driven slump in demand.
Central banks around the world are raising interest rates to tame inflation, raising concerns that rising borrowing costs could stifle economic growth, while mass COVID-19 testing in Shanghai this week raised concerns that it could hit oil Demand for lockdown concerns.
Futures were up $2.46, or 2.4%, at $107.11 a barrel by 1:13 p.m. ET (1713 GMT). U.S. West Texas Intermediate crude gained $2.10, or 2 percent, to $104.83 a barrel. Both benchmarks traded in negative territory before bouncing off session lows.
Following its first monthly drop since November, Brent remained on track for a weekly loss of around 4.1% and WTI down 3.4%. Prices tumbled on Tuesday, with Brent down $10.73, the third-biggest one-day drop for the contract since it began trading in 1988.
U.S. nonfarm payrolls data showed job growth rose more than expected in June, signaling continued strength in the labor market, giving the Federal Reserve the ammunition to raise interest rates by another 75 basis points this month.
“The oil market sees the jobs report as a double-edged sword,” said Phil Flynn, an analyst at Price Futures Group. “From a demand perspective, the jobs numbers are positive. On the bearish side, the market is concerned that the Fed may be more aggressive in raising rates if the job market is strong.”
U.S. energy companies added two oil rigs this week, bringing the total to 597, the highest level since March 2020, energy services firm Baker Hughes said.
Oil prices surged in the first half of 2022. Brent crude traded near an all-time high of $147 after Russia launched its invasion of Ukraine in February, fueling supply concerns.
“Economic concerns may have rattled oil prices this week, but the market is still flashing bullish signals. That’s because the supply crunch is more likely to intensify than ease from here,” said Stephen Brennock of oil broker PVM.
A Western ban on Russian oil exports has propped up prices and triggered a rerouting of flows as the Organization of Petroleum Exporting Countries (OPEC) and allied producers struggle to deliver on promised output increases.
President Vladimir Putin has warned the West that continued sanctions on Russia risk triggering a catastrophic rise in energy prices for consumers around the world.