Oil headed for a weekly gain as a bullish outlook for Chinese demand outweighed lingering concerns over a global economic slowdown.
West Texas Intermediate futures dipped below $78 a barrel on Friday, but are still up around 6% for the week. The market is still waiting for a sustained rebound from China, but some analysts are forecasting Brent crude will rise back above $100 a barrel later this year on the nation’s recovery. Options traders see that rally coming even sooner.
Recession risks still hang over parts of the global economy, and Federal Reserve officials this week signaled further tightening of monetary policy was needed to combat inflation. Goldman Sachs Group Inc. has trimmed its oil price forecasts, citing a “modest softening” to its 2023 balance.
“The market is seeing a recovery in demand, with mobility in China, the US and Europe all showing improvement,” said Gui Chenxi, an analyst at CITIC Futures Co. Oil will climb further if recession concerns ease, she added.
Crude is on track for the biggest weekly advance since mid-January after a three-day rally at the start of the week. Saudi Arabia’s increase in its crude prices for Asia — signaling confidence in the demand outlook — and a series of supply outages from Norway to Turkey underpinned the gains.
Prices
WTI for March delivery dipped 0.3% to $77.80 a barrel as of 7:35 a.m. London time.
Brent for April settlement fell 0.2% to $84.33 a barrel.
The disruptions to supply have led to Brent firming in a bullish backwardation structure. The prompt spread — the gap between its two nearest contracts — was 44 cents a barrel in backwardation, compared with 23 cents a week ago.
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