Crude oil rise today but still it’s sharp weekly drop on low demand

brent oil prices

Brent Crude oil rose toward $94 and WTI toward $87  per barrel on Friday but were still headed for a sharp weekly drop as a weakening demand outlook overshadowed fears of tighter supply.

China’s commitment to its strict zero-Covid policy amid resurgent virus outbreaks dashed hopes for a gradual economic reopening and a rebound in energy demand in the world’s top crude importer.

Data showing a larger-than-expected build in US crude oil demand and inventories also weighed on the demand outlook.

Meanwhile, softer-than-expected US inflation data fueled bets that the Federal Reserve would tighten less aggressively in the coming months, raising hopes that the US economy might be able to avoid a recession.

Elsewhere,the supply outlook remained tight as OPEC+ reduced output by 2 million barrels a day in November, while the European Union is set to ban Russian crude imports by Dec. 5 and Russian oil products by Fed. 5.

While globally The dollar index edged above 108 on Friday but was still on track to end the week more than 2% lower as a cooler-than-expected US CPI report raised hopes for peak inflation and a slower pace of interest rates hikes from the Federal Reserve.

The annual inflation rate in the US eased for a fourth straight month to 7.7% in October, rising at the slowest pace since January and coming in below expectations for a milder drop to 8%. Treasury yields also declined sharply as investors revised expectations for the terminal rate lower, with the benchmark 10-year US yield dropping toward 3.8% for the first time in over a month.