LDN - Business

Oil rises but post weekly loss as economic uncertainty weighs

[April 22, 2023] By Erwin Seba

HOUSTON (Reuters) -Oil prices edged higher on Friday on strong economic data in the euro zone and Britain, but futures fell for the week as interest rate and demand uncertainty weighed.

Brent futures settled up 56 cents at $81.66 per barrel. U.S. West Texas Intermediate crude (WTI) rose 50 cents to $77.87 per barrel.

Brent posted a weekly loss of 5.4%, while WTI fell 5.6%.

Both crude benchmarks slid by more than 2% on Thursday - to their lowest since the unexpected announcement in early April of production cuts by some OPEC countries - on recession fears and swelling U.S. gasoline inventories.

Survey data from the euro zone and Britain lifted oil prices on Friday.

The euro zone economic recovery has unexpectedly gathered pace this month as the bloc's dominant services industry saw already-buoyant demand rise, more than offsetting a deepening downturn in manufacturing, surveys showed.

"It looks like the economy is rebounding from a feeble winter at the moment, but manufacturing weakness remains a concern and dampens the upturn," ING economics said in a note.

British businesses also reported a bounce in activity and the slowest input cost inflation in more than two years, an industry survey showed.

In India, refiners' crude oil processing stayed near record peaks in March, provisional government data showed, catering to solid seasonal demand in the world's third biggest oil consumer.

The prospect of tighter supply added support, with analysts expecting draws from inventories from next month, as a result of OPEC's reduced output targets and rising Chinese demand.

"The foreseeable tightening of supply is likely to push prices up in the medium term," Commerzbank said in a note.

[to top of second column]

Cargo shipping containers are seen adjacent to storage tanks at Marathon Petroleum's Los Angeles Refinery, which processes crude oil into California Air Resources Board (CARB), gasoline, diesel fuel, and other petroleum products, in Carson, California, U.S., March 11, 2022.

Oilfield services giant SLB beat Wall Street estimates for first-quarter profit, as elevated crude prices and tight supplies increased demand for its services.

However, economic uncertainty and the prospect of rising interest rates continued to hang over oil markets.

Uncertainty over demand, especially for the upcoming summer driving season, continues to weigh on traders' minds, said Andrew Lipow, president of Lipow Oil Associates in Houston.

"The market is still under pressure with concerns about demand," Lipow said.

The U.S. Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates when they meet in the first week of May.

In U.S. supply, U.S. energy firms this week added oil and natural gas rigs for the first time in four weeks, energy services firm Baker Hughes Co said.

The oil rig count, an early indicator of future output, rose three to 591 in the week to April 21.

Money managers raised their net long U.S. crude futures and options positions by 11,736 contracts to 199,622 in the week to April 18, the U.S. Commodity Futures Trading Commission (CFTC) said.

(Reporting by Erwin Seba in Houston; additional reporting by Stephanie Kelly, Rowena Edwards, Yuka Obayashi and Jeslyn Lerh; Editing by Marguerita Choy, Alexander Smith and Barbara Lewis)

Back to top