Oil Prices Fall on Recession Concerns and Lower Crude Demand

Oil prices fluctuated within a narrow range on Friday after falling dramatically this week due to lingering doubts about the condition of the economy and the impact of rising interest rates. 

As of 10:50 a.m. Bangkok time, Brent oil futures fell to $81.04 per barrel, while West Texas Intermediate crude futures dropped to $77.33 per barrel. 

Over the course of the week, crude prices dropped by over 6%, ending a run of four consecutive weekly gains. Oil prices are down sharply since early April, after having surged on the back of an unexpected supply cut by the Organization of Petroleum Exporting Countries and its allies, widely known as OPEC+.

According to Hiroyuki Kikukawa, president of Nissan Securities’ NS Trading division, “market sentiment remained bearish after the weak U.S. economic data, along with expectations of interest rate hikes,” increasing worries over a recession that might reduce oil consumption.

Kikukawa predicts $75-$80 trading for WTI over the next week as investors digest if gasoline demand will rise as the summer driving season approaches in the United States and whether China’s oil demand will really rise in the second half of the year.

Indications of a slowing job market and weaker-than-anticipated regional manufacturing data in the United States fueled concerns that economic growth in the world’s largest oil consumer was weakening. A surprising increase in U.S. gasoline inventories demonstrated that demand at the pump remained lackluster.