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.