Oil prices ticked higher on Friday but both benchmarks were set for a weekly loss as worries over weak economic outlook in China, Europe and the United States weighed on oil demand.
Brent crude futures were at $76.56 a barrel, up 41 cent, or 0.5 per cent, at 1420 GMT. US West Texas Intermediate crude was up 36 cents, or 0.5 per cent, at $71.82 a barrel.
The contracts, which had earlier this week hit 2022 lows, are set for weekly losses of around 10 per cent each.
“The EU’s oil embargo against Russia and the G7 price cap on Russian oil that came into force at the start of this week have been just as powerless to prevent this as the easing of coronavirus restrictions in China and robust Chinese crude oil imports have,” Commerzbank analyst Carsten Fritsch said.
The market structure for Brent contracts has switched to contango, meaning contracts for near-term delivery are cheaper than for delivery in six months, indicating that traders see weaker demand .
News of a leak resulting in the closure of Canadian firm TC Energy’s (TRP.TO) Keystone pipeline in the United States prompted a brief rally on Thursday. However, prices eased as the market took a view that the closure would be brief.
The market also largely shrugged off a queue of oil tankers being held up by Turkish authorities on their way to the Mediterranean from the Black Sea.
In China, surging infections will likely depress economic growth in the next few months despite some restrictions being eased, bringing a rebound only later in 2023, economists said.
Also on the downside, the US economy is heading into a short and shallow recession over the coming year, according to economists polled by Reuters who unanimously expected the US Federal Reserve to go for a smaller 50 basis points (bps) rate hike on Dec. 14.
The European Central Bank will also likely lift its deposit rate by 50 bps next week to 2 per cent, despite the euro zone economy almost certainly being in recession as it battles inflation running at five times its target.