Oil prices rose on Friday but were set for a third straight week of losses after sharp declines earlier in the week on fears about interest rate hikes, U.S. banking sector problems and slowing Chinese demand.Brent crude rose $2.88, or 4 percent, to $75.37 a barrel by 1:03 p.m. ET (1703 GMT). U.S. West Texas Intermediate was up $2.85, or 4.2 percent, at $71.42 after four days of declines that sent the contract to lows last seen in late 2021.
The Brent benchmark was on track to finish the week with a decline of about 5.2 percent, while WTI was set for a 6.6 percent loss, despite heading for their biggest daily percentages rises in a month.
“Crude is trying to reverse the recent washout in prices triggered by higher interest rates and recession fears mostly in the banking sector,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Technically, crude has been through an exaggerated liquidation sell-off, Kissler said, adding that long positions by hedge funds were at some of their lowest in years, implying “plenty of buying power on the sidelines.”
Analysts also said that there was a disconnect between oil demand and supply fundamentals and prices. U.S. oil rig count, an indicator of future output, fell by 3, the most since March, to 588 this week, data from oil services firm Baker Hughes showed.
“The upshot is that there is a big disconnect between oil balances and oil prices,” said PVM oil market analyst Stephen Brennock, while Commerzbank analysts noted oil demand concerns were overblown and expect a price correction upward in coming weeks.
Equities, which often move in tandem with oil prices, also edged up. A better-than-expected jobs report helped ease some fears of an imminent economic downturn, spurred in part by renewed banking fears.
Meanwhile in China, factory activity contracted unexpectedly in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector.
However, expectations of potential supply cuts at the next meeting of the OPEC+ producer group in June have provided some price support, said Kelvin Wong, a senior market analyst at OANDA in Singapore.
Meanwhile: ussia’s federal budget revenues from oil and gas, the lifeblood of its economy, fell 64 percent in April from the year-earlier period and declined by 5.9 percent from March, the finance ministry said on Thursday, as a result of higher subsidies to oil refineries.
Budget income from oil and gas sales reached 647.5 billion roubles ($8.3 billion) last month, compared to 688.2 billion in March and 1.798 trillion roubles in April 2022, it said. Subsidies from the budget to the refining companies from the oil reverse excise tax rose by 38 billion roubles to 79.3 billion roubles in April, while the same payments to oil refineries under the “damping mechanism” rose to 107.2 billion roubles from 96.7 billion roubles in March.
At the same time, profit-based tax revenues from oil producers fell last month to 185.4 billion roubles, from 220.6 billion roubles in March. The Russian finance ministry plans to halve subsidies to oil refiners from July 2023, and is aiming to cut payments from the budget under the damping mechanism by 30 billion roubles.
