Oil tumbles $2 on demand concerns, but set to post weekly gain

A pump is seen at a gas station in Manhattan, New York, U.S., August 11, 2022. REUTERS/Andrew Kelly

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LONDON, Aug 12 (Reuters) – Oil prices fell on Friday as recession fears clouded demand prospects but remained on course for a weekly gain.

Brent crude futures were down $2.16, or 2.2%, at $97.44 a barrel as of 1:40 p.m. GMT, while U.S. West Texas Intermediate (WTI) crude fell 2 $.48, or 2.6%, to $91.86.

Brent was on track for a 3% gain this week after falling 14% last week on fears that rising inflation and interest rates could hurt economic growth and demand for oil. fuel.

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The market absorbed contrasting demand views from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

“We are seeing an economic slowdown, but it’s not clear if it’s as big a downturn as some of the recent outlooks have predicted,” said Ole Hansen, head of commodities strategy. at Saxo Bank. “Demand comes and goes, but supply remains the main concern.”

European sanctions against Russian oil are expected to tighten later this year, while a coordinated six-month energy release agreed by the United States and other developed economies is expected to run its course by the end of the year. .

On Thursday, OPEC lowered its forecast for global oil demand growth in 2022 by 260,000 barrels per day (bpd). He now expects demand to rise by 3.1 million bpd this year.

The IEA, meanwhile, raised its demand growth forecast to 2.1 million bpd, citing the shift from gas to oil in power generation.

“There’s a lot of uncertainty about near-term demand. Until it stabilizes it (the market) will be like this for a while,” said Justin Smirk, senior economist at Australian bank Westpac. .

The IEA also raised its Russian oil supply outlook by 500,000 bpd for the second half of 2022, but said OPEC would struggle to increase production.

“The oil market has rebounded this week, with Brent once again flirting with triple digits,” said Craig Erlam, senior market analyst at Oanda in London.

“All things considered, the price moves highlight how stretched the market remains and how sensitive it is still to spikes.”

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Additional reporting by Sonali Paul in Melbourne and Jeslyn Lerh in Singapore Editing by Jason Neely, David Goodman and David Evans

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