Oil markets have faced a highly turbulent trading during the week ending Jan. 6, with Brent swinging in a $10 per barrel range due to conflicting supply and demand worries including global recession, China's Covid policy, and restrictions on Russian fossil fuels.
Brent crude was trading at $78.42 per barrel at 1247 GMT on Friday, posting an 8.77% loss from the Monday session that opened at $85.96 a barrel.
American benchmark West Texas Intermediate (WTI) registered at $73.34 per barrel at the same time on Friday, decreasing 8.87% relative to the opening price of $80.48 a barrel on Monday.
Trading on oil market started on Tuesday due to observance of Sunday’s New Year’s Day holiday.
Prices increased during the first trading session of the week amid supply concerns as the oil markets are awaiting the next round of sanctions on Russian oil products slated for Feb. 5.
The second batch of EU’s Russian fossil fuel ban will impact refined petroleum products like diesel.
It comes two months after the G7 decision to cap the price of Russian oil at $60 per barrel and the EU ban on Russian seaborne crude exports on Dec. 5.
A surprise decrease in gasoline inventories in the US also increased prices in the last trading day of the week, signaling a demand recovery in the world’s largest oil consuming country.
The Energy Information Administration (EIA) said the country’s gasoline inventories decreased by 300,000 barrels to 222.7 million barrels last week.
The country’s commercial crude oil inventories rose by around 1.7 million barrels to 420.6 million barrels, however, the market expectation was a rise of around 3.3 million barrels.
-Recession fears boost bearish sentiment
Downward pressure on prices was driven by fears of global recession after IMF warned of a 'tough 2023' especially after the IMF's Managing Director Kristalina Georgieva said one-third of the world's economies are expected to go into recession in 2023.
'Even countries that are not in recession, it would feel like recession for hundreds of millions of people,' Georgieva told CBS news on Sunday.
The year ahead will be tougher than 2022 for most of the world economy as the US, EU, and China are slowing down, said Georgieva.
Noting that the EU was hit 'very severely' by the ongoing war in Ukraine, Georgieva said that half of the bloc would be in recession in 2023.
She added that the outlook for emerging markets in developing economies was even direr due to interest rate hikes and a strong US dollar.
Adding more to demand worries, the world's second-largest economy, China, significantly increased its first batch of 2023 export quotas for refined oil products, which shows the country is expecting less consumption.
The country is also struggling with rising Covid cases when it decided to ease its strict mitigation measures.
By Sibel Morrow
Anadolu Agency
energy@aa.com.tr