Oil posted a large loss the first week of trading in the new year as demand uncertainty continued to hang over the market.
West Texas Intermediate settled below $74 a barrel, posting the largest weekly loss in a month, over 8.1%. Saudi Arabia cut prices for crude sold to Asia and Europe in February, signaling concerns over the near-term outlook. Meanwhile, China is battling a surge in virus cases after Covid-19 restrictions were lifted, though mobility is set to rise as the Lunar New Year holidays approach.
Earlier in the session, prices pared weekly losses as a slew of US economic data indicated a resilient labor market that nevertheless may give room for the Federal Reserve to slow interest-rate hikes.
Crude’s weak start to the year has come as forward curves continue to signal signs of oversupply. The International Monetary Fund warned this week that a third of the global economy could be in recession in 2023, while Federal Reserve Bank of St. Louis President James Bullard signaled US interest rates weren’t yet sufficiently restrictive.
WTI for February delivery rose 10 cents to settle at $73.77 a barrel in New York.
Brent for March settlement fell 12 cents to settle at $78.57 a barrel.
Still, oil prices may exceed $140 a barrel this year if Asian economies fully reopen after Covid-related lockdowns, according to hedge fund manager Pierre Andurand.
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