Despite the easing news from China this week, oil followed a negative course due to concerns about economic activity.
Oil tumbled nearly 10 percent for the week as concerns over the economic outlook cast a shadow over China’s easing of strict virus restrictions and the U.S. crude cut.
U.S. crude oil traded at around $72 a barrel on Friday. The oil market also faces a persistent lack of liquidity, which leaves prices prone to large fluctuations.
The pipeline closure after the Keystone leak has interrupted the flow of crude oil in the U.S. However, investors think that part of the line will be back in operation soon.
“Farries of wider recession accompanying global monetary policy tightening have dragged oil down, and there could be a ‘tightening wall’ given the delays in monetary policy,” said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank Asia.
Although U.S. Treasury Secretary Janet Yellen thinks the U.S. continues to avoid a recession, crude oil is on track for the first consecutive quarterly decline since mid-2019 amid a worsening economic outlook as central banks tightened monetary policy.
Investors are also closely watching the developments regarding Russian oil, which has caused tankers to become stuck in Turkish territorial waters due to the insurance dispute. According to the Oman Energy Minister, there is widespread concern about the cap imposed by the G7 countries among oil-dependent economies, citing concerns that it may involve other countries.
Still, Russia sees the price cap as having a limited impact on crude oil production.
