Oil futures lost ground Friday, but remained on track for a weekly rise as fears of a sharp global economic slowdown eased.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
-1.67% CLU22,
-1.67%
fell 93 cents, or 1%, to $93.41 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 4.9% weekly rise. -
October Brent crude
BRN00,
-1.42% BRNV22,
-1.42% ,
the global benchmark, was off 76 cents, or 0.8%, at $98.84 a barrel on ICE Futures Europe, headed for a 4.1% weekly advance. -
Back on Nymex, September gasoline
RBU22,
-1.71%
fell 1.3% to $3.033 a gallon, but was on track for a weekly jump of more than 6%. September heating oil
HOU22,
-0.09%
rose 0.5% to $3.501 a gallon, up nearly 9% for the week. -
September natural gas
NGU22,
-3.11%
dropped 2.1% to $8.684 per million British thermal units, up 7.8% on the week.
Market drivers
The energy complex was in bounce mode after WTI fell more than 9% last week and Brent dropped 8.7%, with crude finding a footing after last Friday’s strong U.S. jobs report and inflation data this week that showed price pressures moderating. That was boosting hopes that the Federal Reserve wouldn’t need to raise rates as aggressively as feared, potentially leaving room for policymakers to rein in still red-hot inflation without sending the economy into recession.
There’s more than a hint of irony in that market narrative, however, noted Alex Kuptsikevich, senior market analyst at FxPro, with a fallback in gasoline prices from record highs the biggest factor in cooling the July consumer price index reading.
“A sharp slowdown in price growth and a reduction in the fuel component fueled speculation that the Fed would slow policy tightening. But oil is a risky asset, so the rest of the market enjoyed a rise,” he said, in a note. “The implication is that oil rose this week because the economy showed the effects of its decline in the previous two months.”
The price rally of the past week fits into a “corrective rebound picture,” the analyst wrote, warning that if bulls “do not find a new fundamental reason to buy at current levels near $94 for WTI in the next few days, we should expect a bear market recovery.”
