Futures Movers: Oil prices head for a weekly loss as investors ride supply-and-demand seesaw

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Oil prices fell Friday, as investors reacted to fresh concerns that a hawkish Federal Reserve could trigger demand challenges for the commodity.

Price action
  • West Texas Intermediate crude for June delivery 



    fell $1.84, or 1.9%, to $101.88 a barrel. On Thursday, the contract settled up 1.6% to $103.79 a barrel on the New York Mercantile Exchange after trading as high as $105.42.

  • June Brent crude


    fell around $2, or 2.1%, to $106.26 a barrel. The global benchmark fell 1.2% to $108.33 a barrel on ICE Futures Europe on Thursday.

  • May gasoline

     fell 1.7% to $3.279 a gallon, while May heating oil 

     lost 1.8% to $3.857 a gallon.

  • May natural gas 

    edged up by 0.8% to $7.015 per million British thermal units.

Market drivers

A choppy week for oil is set to leave the U.S. benchmark with a loss of nearly 4% on the week, with even deeper losses for Brent.

“One part of this has been played by concerns about demand in connection with the rigid COVID policy in China, which threatens to paralyze the key business hub of Shanghai for a period of several weeks. Sharply rising bond yields, a firm U.S. dollar and falling stock markets are likewise generating headwinds,” said Commerzbank analyst Carsten Fritsch, in a note to clients.

Read: Stock futures drop and bond yields climb following hawkish comments by Fed’s Powell

Oil prices fell Friday in step with U.S. stock futures, as investors continued to absorb hawkish comments from Federal Reserve Chairman Jerome Powell on Thursday. Markets are unsure whether the Fed will get the balance right — raising interest rates to battle inflation but without triggering a recession.

“The risks are certainly more tilted to the upside [for oil] given the war in Ukraine and a potential embargo on Russian exports, but lockdowns in China and the risk of a Fed-driven economic slowdown are also significant,” said Craig Erlam, senior market analyst at OANDA in a note to clients.

Production outages in Libya had also been keeping prices supported this week, analysts noted. Investors are also watching for a potential plan by European Union countries to eventually phase out imports of Russian oil, news reports said Thursday.

See: Libya oil production outage a ‘convenient coincidence’ that helps Russia: analyst

Analysts at Morgan Stanley on Thursday raised their third-quarter price forecast for Brent to $130 a barrel from $120 on expectations for a greater deficit ahead.

“Oil demand is likely to recover more slowly than we previously expected, but this is more than offset by a weaker supply outlook, driven by Russia and Iran,” they said in a note.

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