Oil Aims for Fourth Consecutive Weekly Gain on Demand Outlook for Products, According to Bloomberg

Oil prices are poised for a slight weekly increase as optimism regarding demand outweighs worries about stricter monetary policies and a potential economic downturn that have caused turbulence in broader financial markets.

In early Asian trading, West Texas Intermediate crude dipped toward $111 per barrel after a notable rise on Thursday. The US crude benchmark has increased about 1% this week and is on track for its fourth consecutive weekly gain, marking its best performance since mid-February, prior to Russia’s invasion of Ukraine.

The global market for fuel products is tightening, particularly in the United States, where gasoline and diesel prices have skyrocketed in anticipation of the summer driving season. A forecast from an auto club suggests that nationwide travel is expected to approach pre-pandemic levels.

Oil prices have surged nearly 50% this year as demand has rebounded from pandemic-related impacts, while Russia’s aggression in Ukraine has sent shockwaves through global markets. Although the US and UK have imposed bans on Russian oil exports, deliveries to Asia have increased, with China looking to replenish its strategic reserves with discounted Russian oil amidst ongoing efforts to manage Covid-19 outbreaks.

The rise in oil prices has fueled the fastest inflation in decades, compelling the US Federal Reserve to commit to ongoing interest rate hikes until there are clear indications that inflationary pressures are loosening. This has resulted in significant fluctuations in investors’ risk appetite, impacting equity, bond, and commodity markets.