By Ambar Warrick
Investing.com-- Oil prices fell on Friday after a warning on economic growth from the Federal Reserve, but were still set to end the week higher on positive signals from China and on the prospect of tightening supply in the coming months.
London-traded Brent Oil Futures, the global benchmark, fell 0.3% to $92.45 a barrel, while West Texas Intermediate crude futures rose 0.2% to $84.67 a barrel by 21:34 ET (01:34 GMT). Brent was set to end the week about 0.7% higher, while WTI was flat.
Crude prices fell sharply from intraday highs on Thursday, settling only slightly higher after Philadelphia Fed President Patrick Harker said the central bank is actively trying to slow the economy, in order to combat rising inflation. His comments came as a confirmation of sorts that the U.S. is likely to see a recession due to rising interest rates, which could dent crude demand.
Rising U.S. interest rates and stubbornly high inflation have roiled crude markets this year, as traders feared a slowdown in the world’s largest economy.
But data this week showed that U.S. crude has remained steady in recent weeks. U.S. oil inventories unexpectedly fell last week, with supply, particularly of gasoline, remaining tight in the country.
Markets also largely disregarded U.S. President Joe Biden’s plan to release about 15 million barrels of oil from the Strategic Petroleum Reserve, as the ensuing rise in supply will be largely offset by a 2 million barrel per day production cut by the Organization of Petroleum Exporting Countries and allies (OPEC+).
Several members of the cartel also voiced support for the production cut earlier this week, providing positive cues to oil markets.
In another positive signal for crude prices, reports that China was scaling back some quarantine measures brewed optimism over improving demand in the world’s largest oil importer.
But markets remained wary towards the country, especially after President Xi Jinping said Beijing has no plans to soften its strict zero-COVID policy.
Traders are also waiting to see how the country’s economy performed in the third quarter, after the government indefinitely delayed the release of the GDP data.