Oil heads for weekly loss as recession fears muddle outlook

Oil headed for a weekly loss after a week of volatile trading that saw recession fears run headlong into a fundamentally tight supply picture.

West Texas Intermediate crude futures traded near US$104 a barrel, putting the US benchmark on course for a weekly fall of about 4 per cent. Investors remain concerned that restrictive US monetary policy could herald a recession. Still, physical signals remain robust, especially in the US, where the prompt timespread, which closely reflects the supply and demand balances at the country’s biggest storage hub in Cushing, Oklahoma, surged to the highest level since March earlier in the week. 

“Recession fears sent WTI crude below the US$100 a barrel earlier in the week but that was overdone as risks to Russian supplies remain elevated,” said Ed Moya, senior market analyst at Oanda Corp. “The oil market clearly has a weaker crude demand outlook but a tight market remains as the supply situation remains vulnerable to potentially significant disruptions.”