Crude oil finished its biggest weekly decline since early April, with prices sliding near their lowest levels in six months on signs that a global economic slowdown is weighing on demand.
Front-month WTI crude oil (CL1:COM) for September delivery fell 9.7% for the week to $89.01/bbl, dropping six out of the previous eight weeks, and October Brent crude (CO1:COM) closed down 8.7% to $94.92/bbl; also, front-month Nymex RBOB gasoline futures (XB1:COM) slumped 8.3% to $2.8556/gal this week.
While oil prices fell, energy equities posted their poorest showing since mid-June, with the S&P 500 Energy Index declining 6.8% for the week.
“Traders are becoming much less concerned with the supply issues related to the Russia-Ukraine war and instead are beginning to watch demand metrics deteriorate amid a considerable uptick in recession calls,” according to Sevens Report Research.
Gasoline demand in the U.S. is now 9% below year-ago levels and even lower than the pandemic summer 2020, so “it is clear that prices above $100/bbl are not sustainable,” Sevens said.
Recession fears intensified Thursday as the Bank of England raised interest rates by 50 basis points, the most since 1995, and warned of a lengthy recession in the U.K.
OPEC’s latest meeting barely created a ripple when the group agreed this week to raise its oil production goal by 100K bbl/day in September, one of its smallest-ever increases.
But crude bounced off their lows Friday after data showed the U.S. economy added 528K jobs in July, more than double the consensus estimate.