Oil fell for a second consecutive month as a deteriorating demand outlook offset concerns about tight physical supplies.
West Texas Intermediate (WTI) for September delivery on Friday rose 2.28 percent to US$98.62, bringing this week’s gain to 4.14 percent.
Brent crude for September delivery rose 2.1 percent to US$103.97, up 0.75 percent from a week earlier.
Futures nevertheless recorded their first back-to-back monthly decline since 2020 as fears of an economic slowdown fueled bearish sentiment across markets.
The US economy shrank for a second quarter as rampant inflation undercut consumer spending, while Citigroup Inc said there are signs the oil market is moderating.
Still, Exxon Mobil Corp does not see any signs of major fuel demand destruction.
“I wouldn’t tell you that we’re seeing something that would say we are in a recession, or near recession,” Exxon Mobil chief executive officer Darren Woods said.
While oil has given up most of the gains seen following Russia’s invasion of Ukraine in late February, the US benchmark is still up more than 30 percent this year. The surge in energy prices has underpinned oil producer earnings, with Exxon and Chevron Corp joining Shell PLC with record profits. A weaker US dollar has also helped to boost commodity prices.
“The underlying fundamentals for oil still remain quite strong,” said Edward Bell, senior director of market economics at Emirates NBD Bank PJSC. “There are serious risks around supply: sanctions on Russia that will kick in more meaningfully later this year, OPEC+ topping out in terms of what it can add to the market and the supply response in the US not coming on.”
Oil production in Texas and New Mexico dipped in May, US government data showed, in the latest sign that growth is slowing the prolific Permian Basin. Growth has largely stalled even as producers add drilling rigs due to rising inflation in everything from labor to equipment costs.
The spread between WTI and Brent, also known as the arb, has widened as a reduction in Russian crude flows tightened markets in Europe. The global benchmark was at a premium of around US$11 to US crude, compared with about US$6 at the start of the month.
The move is exacerbated by Brent crude’s September contract expiry, but the October spread is also wide at about US$7 a barrel.
“With no major signs of fuel demand destruction, oil seems like it will soon find a home above the US$100 a barrel mark,” Oanda Corp senior market analyst Edward Moya said.
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