By Ambar Warrick
Investing.com– Oil prices fell from a recent peak on Friday, but were set to rise for a second consecutive week as a swathe of positive U.S. data helped ease fears over an economic slowdown, while the prospect of tightening supply also helped buoy prices.
London-traded oil fell 0.2% to $94.44 per barrel. It fell 0.8% to $88.37 per barrel by 21:25 ET (01.25 GMT). Brent futures were expected to increase by 1.2%, while WTI futures rose nearly 4% this week. This was despite WTI futures being up almost 4% due to increased demand and a wider price gap.
Third quarter U.S. on Thursday showed that the world’s largest economy fared better than expected in a high-rate environment, and also broke two consecutive quarters of declines.
Data released earlier showed that the U.S. had exported record amounts of oil in week prior, which was a positive sign for global crude demand. A larger-than-expected drop in also showed that U.S. crude was still strong despite rising inflation rate and interest rates.
Positive cues drove oil prices to a 2-week high and set them up for their second consecutive week of gains.
But the stronger-than-expected GDP reading boosted the , which weighed slightly on crude prices on Friday. The greenback ended a five-day losing streak that had also benefited oil markets.
Now the focus shifts to the following week, when markets will be watching for signs that the central bank might make a dovish turn. However, the chances of such an event occurring are uncertain given the recent resilience shown by the U.S. economic system.
The Fed is expected to signal more increases, a move that will likely cause volatility in the near-term oil markets.
Rising interest rates were a major factor in the rise in crude oil prices this past year. Tighter liquidity conditions and a stronger US dollar contributed to an increase in the price of oil.
The outlook for oil in 2022 remains positive, especially after the Organization of Petroleum Exporting Countries reduced production by 2,000,000 barrels per day – the largest reduction since the 2020 COVID pandemic.
In the coming months, Russia will face more Western sanctions.
However, the demand side is more challenging with rising interest rates and an increase in inflation. This could limit the upside for crude oil prices. A prolonged slowdown in China, the world’s largest crude importer, is the biggest source of concern for oil bulls.