Oil prices fell in early trading on Friday after a slight rebound in the previous session, sending them heading lower for the second week in a row amid concerns that large interest rate increases by central banks and China’s COVID-19 restrictions will hurt demand.
Brent crude futures fell 12 cents, or 0.1 percent, to $89.03 a barrel, after rising 1.3 percent on Thursday.
US West Texas Intermediate crude futures fell 19 cents, or 0.2 percent, to $83.35 a barrel, after rising 2 percent in the previous session.
Both benchmarks fell about 4 percent for the week, with the market sliding at one point to its lowest level since January.
The drop came despite a slight production cut by the Organization of the Petroleum Exporting Countries (OPEC) and allies, called the OPEC community, Russia’s threat to cut oil flows to any country that supports a ceiling on its crude price, and a weaker outlook for oil. The growth of oil production in the United States.
The US Energy Information Administration said, on Thursday, that it expects US crude production to rise by 540 thousand barrels per day to 11.79 million barrels per day in 2022, down from previous expectations of an increase of 610 thousand barrels per day.
Analysts said that in light of the supply outlook, the sell-off, which sent the 50-day moving average below the 200-day moving average in the middle of the week in what is referred to as the ‘death cross’, may be overstated, As demand in China, the world’s largest oil importer, could recover quickly.
“Chinese demand is more difficult to predict, but the post-COVID reopening has previously seen a dip rather than a gradual rise in demand. In this context, fundamentals look skewed against the latest technical signals,” said National Australia Bank analysts. note.
At the moment, restrictions are tightening in China. Chengdu on Thursday extended a lockdown for most of its population of more than 21 million, while millions in other parts of China were urged not to travel during upcoming holidays.