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(Bloomberg) -- Oil headed for its biggest weekly decline since the middle of July as a streak of disappointing economic data added to fears a global recession is coming.
Futures in New York edged higher Friday, but are down 5.8% this week. A key measure of American service industry activity dropped to the lowest in three years last month, while an employment gauge registered its weakest print in more than five years. That came after U.S. payroll numbers fell short of estimates earlier in the week, there were signs of stagnation in the euro-area economy and there was a surprise increase in American crude stockpiles.
The deteriorating U.S. economy -- and more signs of weakness in China and Germany -- is worsening what was an already fragile consumption outlook for fuels. OPEC member Nigeria warned Thursday that oil demand will be “very challenging” next year. These concerns and a quick return of Saudi Arabian production have evaporated oil’s gains following the Sept. 14 attacks on the kingdom.
“Oil markets are focusing on severe macro risks, but are also shrugging off the most heightened geopolitical risk in years,” Citigroup Inc (NYSE:C). analysts including Ed Morse wrote in a report. “As markets shed just about any consideration of supply risk, attention stays focused on what is nearly universally expected to be a significantly weaker year of demand growth.”
West Texas Intermediate for November delivery rose 25 cents, or 0.5%, to $52.70 a barrel on the New York Mercantile Exchange as of 11:06 a.m. in London.
Brent for December increased 0.8% to $58.19 a barrel on the ICE (NYSE:ICE) Futures Europe Exchange, and is down 6.1% for the week. It traded at a $5.57 premium to WTI for the same month.
A key U.S. factory index fell to a 10-year low on Tuesday as businesses held back investments amid tariffs and the U.S.-China trade war. That was followed by data Wednesday showing hiring at U.S. companies cooling, while quarterly sales figures from automakers such as Ford Motor (NYSE:F) Co. are adding to the concern.
Washington and Beijing are set to restart high-level trade negotiations next week, but the chances of a short-term breakthrough don’t appear to be high. Meanwhile, the U.S. imposed tariffs on European goods including aircraft and dairy products this week.
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