Jun 24, 2022 02:50AM ET
By: AnalysisWatch
Oil prices rallied on Friday in a volatile trading session as supply uncertainty prevailed over fears of slowing demand due to cooling US economic activity.
Brent crude futures were up 31 cents, or 0.3 percent, to $110.36 per barrel as of 6:30 a.m. GMT, while West Texas Intermediate crude futures were up 59 cents, or 0.6 percent, to $104.86 per barrel.
Looking at the respective futures curves, both Brent and WTI are still lagging strongly, suggesting that supplies of fast-moving oil remain as tight as ever.
Rising recession fears appear to be causing a reduction in speculative long positions in both contracts, although in the real world, energy supplies are as tight as ever.
Oil prices rose briefly by nearly $1 a barrel in early Asian trade, then pared their gains and eventually remained unchanged intraday in Asia on Friday.
For now, fears of slowing demand stemming from rising interest rates and slowing U.S. economic activity are limiting price gains.
Crude oil futures were in selling mode after the U.S. manufacturing and services PMIs came in well below expectations, along with a decline in German manufacturing data, said Stephen Innes, managing partner at SPI Asset Management.
OPEC and allied producing countries, including Russia, are likely to stick to a plan to accelerate output increases in August in hopes of easing crude prices and inflation as U.S. President Joe Biden plans to visit Saudi Arabia, sources said.
At its most recent meeting on June 2, OPEC+ agreed to increase output by 648,000 barrels per day in July, or 7% of global demand, and by the same amount in August, up from an initial plan to increase output by 432,000 barrels per day in the three months to September.
However, the group has struggled to meet monthly increase targets due to underinvestment in oil fields by some OPEC members and, more recently, losses in Russian output.
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