Oil prices poised for a weekly gain as recession worries subside

12 Aug 2022 , 09:07 AM

Due to conflicting opinions from OPEC and the International Energy Agency (IEA), oil prices fell in early trade on Friday, although benchmark contracts were on track to post weekly gains as recession worries subsided.

At 01:12 GMT, the price of Brent oil futures dropped 34 cents, or 0.3%, to $99.26 per barrel, while the price of U.S. West Texas Intermediate (WTI) crude futures down 34 cents, or 0.3%, to $94.00 per barrel.

With concerns that increasing inflation and interest rate rises could harm economic growth and fuel consumption, Brent was on course to rise more than 4% this week, partially making up for last week’s 14% loss, which was its largest weekly decline since April 2020.

Organization of the Petroleum Exporting Countries (OPEC) reduced its prediction for increase in global oil demand in 2022 by 260,000 barrels per day on Thursday (bpd). It now anticipates a 3.1 million bpd increase in demand this year.

That goes against the IEA’s point of view. The latter increased its demand growth projection owing to the move from gas to oil in power generation as a result of rising gas costs, to 2.1 million bpd. The IEA also increased its forecast for Russian oil supply by 500,000 bpd for the second half of 2022 because the nation’s output has shown to be more resilient than anticipated in the face of sanctions related to the crisis in Ukraine. The IEA predicted that OPEC will find it difficult to increase output.