Oil prices rebound, but still set for seventh straight week in red

Investing.com– Oil prices rose from a near six-month low in Asian trade on Friday, but were still set to end lower for a seventh consecutive week as underwhelming production cuts, high U.S. supplies and fears of weakening demand battered markets. 

Weak oil import figures from China also weighed on sentiment, as data this week showed oil shipments to the world’s largest crude importer hit a four-month low in November. 

The reading pushed up concerns over cooling crude demand in the country, especially after a steady build-up in its oil inventories this year. It also came on the heels of several middling economic data prints for November, which pointed to sustained weakness in the country. 

expiring February rose 1% to $74.81 a barrel, while rose 1% to $70.28 a barrel by 20:46 ET (01:46 GMT). Both contracts were down between 5% to 7% this week, and were trading close to their weakest levels since June.

Still, recent weakness in the afforded some relief to oil prices. The greenback fell sharply on Thursday as data showed continued weakness in the labor market- a key factor in determining the path of U.S. interest rates.

Markets were now awaiting more cues on the U.S. economy from data due later in the day. But while a cooling labor market diminishes the prospect of higher interest rates, it also points to a softer U.S. economy, which could dent oil demand.

Underwhelming production cuts from the Organization of Petroleum Exporting Countries and allies (OPEC+) also weighed on crude prices, as the cartel announced less than 1 million barrels per day in new cuts going into 2024.

Reports this week showed that Russian and Saudi leaders were now considering more production cuts, although recent discord between members of the OPEC+ suggested that the scope of future output curbs from the cartel remained limited.

Russia and Saudi Arabia had led the OPEC+ in trimming supplies over the past year. But their measures provided only a fleeting boost to oil prices. 

In the U.S., crude production remained near record highs of over 13 million barrels per day in the week to Dec. 1. An oversized build in fuel inventories also pushed up concerns over slowing consumption in the world’s largest fuel consumer.

hit a two-year low following the data, and were also headed for a seventh straight week in red. 

Crude’s recent rout has been largely driven by concerns over slowing economic growth across the globe, following weak data prints from Japan, the U.S. and the euro zone. 

But it has also made oil prices appear oversold in recent sessions, which analysts say could spur some recovery in the near-term. ING expects to trade in the low $80s in the first quarter of 2024. 

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