Oil prices head for fourth weekly drop as demand fears weigh

By Rowena Edwards

LONDON (Reuters) -Oil prices slipped on Friday, heading for a fourth weekly decline, as renewed economic concerns in the United States and China revived concern about fuel demand growth in the world’s two largest oil consumers.

Brent crude futures fell 43 cents, or 0.57%, to $74.55 a barrel by 0931 GMT. West Texas Intermediate (WTI) U.S. crude futures were down 33 cents, or 0.47%, to $70.54.

Both benchmarks are set to fall by more than 1% for the week, which would be the longest streak of weekly declines since November 2021.

With talks over the U.S. government’s debt ceiling postponed and renewed fears that another regional bank is in crisis, there is mounting concern that the U.S. will enter a recession.

Treasury Secretary Janet Yellen said on Friday that the U.S. faces financial and economic catastrophe if Congress fails to raise the debt ceiling.

And the U.S. Federal Reserve will probably need to raise interest rates further if inflation stays high, Fed Governor Michelle Bowman said on Friday, adding that data so far this month has not convinced her that price pressures are receding.

Meanwhile, a decline in new loans to businesses in China and weaker economic data there earlier in the week refocused doubts about its recovery from COVID restrictions driving oil demand growth.

China’s April consumer price data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more stimulus may be needed.

The decline in oil prices was limited by a signal from U.S. energy secretary Jennifer Granholm that the country could repurchase oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale next month.

In addition, the Organization of the Petroleum Exporting Countries (OPEC) kept its global oil demand forecast for 2023 unchanged, as it expects economic risks to be offset by higher Chinese demand growth.

The oil market is barrelling towards a supply deficit, assuming OPEC delivers on its latest production cuts,” said PVM oil market analyst Stephen Brennock.

(Reporting Rowena Edwards in London, additional reporting by Yuka Obayashi in Tokyo and Andrew Hayley in Beijing; editing by Jason Neely)