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Oil rises 2% but posts weekly loss on recession fears

Commodities Jul 08, 2022 03:22PM ET
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© Reuters. FILE PHOTO: The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
 
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By Stephanie Kelly

NEW YORK (Reuters) -Oil prices rose about 2% in volatile trade on Friday but were still heading for a weekly decline as investors worried about a potential recession-driven demand downturn even as global fuel supplies remained tight.

Central banks around the world are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle growth, while mass COVID-19 testing in Shanghai this week caused worries about potential lockdowns that could also hit oil demand.

Brent crude futures rose $2.37, or 2.3%, to settle at $107.02 a barrel. U.S. West Texas Intermediate crude rose $2.06, or 2%, to settle at $104.79 a barrel. Both benchmarks traded in negative territory and then rebounded from session lows.

Brent posted a weekly decline of about 4.1% and WTI a loss of 3.4%, following on from the first monthly decline since November. Prices tumbled on Tuesday, when Brent's $10.73 drop was the contract's third-biggest daily fall since it started trading in 1988.

U.S. non-farm payrolls data showed the economy added more jobs than expected in June, a sign of persistent labor market strength that gives the Federal Reserve ammunition to deliver another 75-basis-point rate hike this month.

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

U.S. energy firms this week added two oil rigs, bringing the total to 597, highest since March 2020, energy services firm Baker Hughes Co said.

Oil prices soared during the first half of 2022. Brent neared the record high of $147 after Russia launched its invasion of Ukraine in February, adding to supply concerns.

"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," said Stephen Brennock of oil broker PVM.

Western bans on Russian oil exports have supported prices and sparked a re-routing of flows while the Organization of the Petroleum Exporting Countries (OPEC) and allied producers struggle to deliver on pledged production increases.

Russian President Vladimir Putin warned the West that continued sanctions against Moscow risked triggering "catastrophic" energy price rises for consumers around the world.

Oil rises 2% but posts weekly loss on recession fears
 

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Comments (7)
Francis Lim Wei
Francis Lim Wei Jul 09, 2022 10:45AM ET
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Putin says new sanctions will be catastrophic for energy markets https://www.bloomberg.com/news/articles/2022-07-08/putin-says-new-sanctions-would-be-catastrophic-for-energy-market
FMGK Blue
FMGK Blue Jul 09, 2022 12:24AM ET
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Long time we haven't had the "recession fears" in a title...
Terry Campbell
Kaza Jul 08, 2022 7:03AM ET
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And then: "Investing.com – Oil was up on Friday morning in Asia on worries over tight global supplies."
Brad Albright
Brad Albright Jul 08, 2022 7:03AM ET
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It really is ridiculous, isn't it? If there is some specific event that clearly causes a market reaction (like Yen falls on Abe assassination), the headline writers really should stop trying to attribute a cause to transitory market moves. Something like Oil Down for the Week is perfectly sufficient and would avoid the multiple contradictory headlines in a day.
MarcinYo Yo
MarcinYo Yo Jul 08, 2022 6:03AM ET
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So is going up today 🤣
Fernie Mac
Fernie Mac Jul 08, 2022 2:18AM ET
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who the ********keeps writing this ****on here??? "Dow down on recession fears." What kind of news ****is this and where are you getting your sources????
Todd Gray
Todd Gray Jul 07, 2022 11:32PM ET
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Buck. Media doesn't want us to think and feel our own emotions. They want us to think & feel what they want us to think and feel. Which is an extraordinarily unhealthy thing to do to people. And, I bet most of them treat their pets better than that.
Brad Albright
Brad Albright Jul 07, 2022 11:32PM ET
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You are exactly right. I was on the Media conference call last night and everybody except for Jimmy Kimmel agreed that we all want to make sure nobody feels their own emotions. Then we took our pets our for dinner.
Buck Wood
Buck Wood Jul 07, 2022 11:03PM ET
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The usual inflammatory headline from Reuters. It should read flat to slightly down. How do they know how investors are feeling? They don't. But never let the truth get in the way of what you want to print.
 
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