Futures Movers: Oil prices poised to break a string of weekly gains as demand worries linger

Oil prices are headed for a weekly loss as central bank tightening this week has fueled worries over global demand. Read More...

Oil prices were struggling for traction on Friday, as investors juggled concerns over demand and the commodity was set to market its first weekly loss in several.

Price action

West Texas Intermediate crude for July delivery CL.1, -0.54% CLN22, -0.54% CL00, -0.55% fell 35 cents, or 0.2%, to $117.36 a barrel. The contract climbed 2% to $117.58 a barrel on the New York Mercantile Exchange on Thursday, clawing back some losses from Wednesday’s 3% decline.
August Brent crude BRN00, -0.34% BRNQ22, -0.34%, the global benchmark, was 17 cents lower, or 0.2%, to $119.64 a barrel. The contract rose $1.30, or 1.1%, to $119.81 a barrel on ICE Futures Europe on Thursday.
Back on Nymex, July gasoline RBN22, -2.58% fell 1.7% to $3.887 a gallon, while July heating oil HON22, -0.58% fell 0.3% to $4.558 a gallon.
July natural gas NGN22, -1.81% fell 2.8% to $7.259 per million British thermal units.

Market drivers

Oil prices have struggled this week as investors have backed away from perceived riskier assets in the wake of a Federal Reserve interest rate hike. Fears that the economy could tip into recession have weighed on commodities and other perceived riskier assets.

The Fed was followed by a bigger-than-expected hike from the Swiss National Bank, and Bank of England also raised interest rates.

Read: ‘The opposite of policy coordination’: Swiss National Bank and Bank of England lift interest rates following Fed hikes

WTI crude is likely to lose 2.5% this week, on a continuous contract basis, which would mark the first drop after three straight weekly gains. Brent was set to drop 1.8%, breaking a four-straight weekly string of wins.

Crude rebounded on Thursday on news that the U.S. had hit Iran with fresh sanctions to push that country back towards a nuclear agreement.

But investors can’t shake worries over demand, with prolonged lockdowns in China the main catalyst, noted Saxo Bank strategists. “On top of that the short-term technical outlook has weakened following several failed attempts to break higher, but given the tight supply outlook, highlighted by the IEA earlier in the week,” they said.

Read: Russia again cuts natural gas exports to European countries

The International Energy Agency said earlier this week that it expects supply growth to lag behind demand, pushing an already tight market witnessing soaring prices into a 500,000-barrel-a-day deficit.