By Adedapo Adesanya
The oil market improved by about 3 per cent on Friday, supported by tighter supply, with the Brent crude futures growing by $3.07 or 2.8 per cent to $113.12 a barrel and the US West Texas Intermediate (WTI) crude futures expanding by $3.35 or 3.2 per cent to $107.62.
Despite the bullish news on Friday, the black gold notched its second weekly decline on concerns that rising interest rates could push the world economy into recession.
The already tight market was further impacted as crude production dropped 45 per cent in less than a decade, currently averaging 275,000 barrels per day as protests of indigenous nationalities of Ecuador demanding fuel subsidies saw them invade and vandalize at least a dozen of oil fields and risk pipeline supply to the country’s ports.
Indigenous leaders have presented the government of President Guillermo Lasso with a list of 10 demands, including a freeze on national gas prices, greater investments in education and healthcare, and more jobs.
In an unprecedented turn of events, the world’s most-watched oil data report on inventories from the US was not released this week due to a power problem.
The Energy Information Administration (EIA) hopes to shed more light on the reasons for the delay next Monday.
Meanwhile, the US Federal Reserve’s unconditional focus on taming inflation continues to squeeze speculators out of the Brent and WTI futures contracts.
The US Federal Reserve Chair, Mr Jerome Powell, said the central bank’s focus on curbing inflation was “unconditional”, adding to fears about more interest rate hikes.
Russia’s invasion of Ukraine exacerbated tight supplies this year just as demand has been recovering from the COVID pandemic.
Crude has also gained support from the almost total shutdown of output in OPEC member Libya due to unrest.
On Thursday, the Libyan oil minister said the National Oil Corporation (NOC) chairman was withholding production data from him, raising doubts over figures issued last week.
The Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, meet on June 30 and are expected to stick to a plan to only slightly accelerate hikes in oil production in July and August.
US energy firms added oil and natural gas rigs for a second week in a row in a record 23-month streak of increases, as high crude prices and prodding by the government prompted drillers to return to the wellpad.