Oil increased 3% in the week ending Dec. 16 owing to supply fears and hopes for demand recovery from China, while lingering recession fears limit further price gains.
International benchmark Brent crude traded at $79.20 per barrel at 2.03 p.m. local time (1103 GMT) on Friday, a 3% rise from the opening price on Monday of $76.88 a barrel.
The American benchmark West Texas Intermediate (WTI), trading at $74.09 per barrel at the same time, saw a 3.1% increase compared to Monday's opening of $71.89 a barrel.
Oil prices started the week on a bullish note with supply concerns as the Keystone pipeline in the US was shut down due to the largest crude oil spills in roughly ten years.
Supply fears further increased after Russian President Vladimir Putin denounced the West’s decision to impose a price cap on Russian oil exports as 'silly, harmful, and ill-considered,' and said Russia could cut oil production and will refuse to sell oil to any country that imposes the price cap on Russian oil.
Efforts for loosening 'Zero-COVID' policy in China, the world's largest oil importer, created a positive sentiment in the market, causing prices to rise.
In contrast to the market consensus of a 3.9 million-barrel fall, the American Petroleum Institute (API) reported its estimate of a surge of over 7.8 million barrels in US crude oil stocks late Tuesday, limiting further price upticks.
The Energy Information Administration (EIA) data released late on Wednesday supported API predictions with a 2.5% increase in US commercial crude oil inventories for the week ending Dec. 9. The inventories rose by around 10.2 million barrels to 424.1 million barrels.
The Fed, in line with the expectations, raised its benchmark interest rate by 50 basis points in its fight against record inflation, carrying the target range for the federal funds rate to between 4.25% and 4.5% -- its highest in 15 years. Fed decision supported demand concerns and recession fears.
Fed’s move was followed by several central banks including Mexico, Denmark, Norway, UK and EU which raised interest rates and warned of further increases to come in the fight to tame inflation.
Bearish sentiment was further supported early on Friday as the Keystone oil pipeline's operator, TC Energy, resumed the part of the pipeline which was unaffected by the leak that led to its shutdown last week, but it is still unclear when the pipeline will be fully operational again.
By Ebru Sengul Cevrioglu
Anadolu Agency
energy@aa.com.tr