Oil prices rose on Feb. 6 from an 8% drop last week on supply concerns, but was still trading near three-week lows, driven by worries that slower growth in major economies may limit fuel use.
Brent crude futures rose 37 cents, or 0.5, to $80.31/bbl at 1218 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped 13 cents or 0.2% to $73.52.
While recession fears dominated the market last week, prospects for China's recovery after the relaxation of COVID-19 curbs there remains a driver for oil prices.
The International Energy Agency (IEA) expects half of global oil demand growth this year to come from China, its chief Fatih Birol said on Feb. 5, adding that jet fuel demand was surging.
Last Feb. 3, WTI and Brent slid 3% after strong U.S. jobs data raised concerns the Federal Reserve would keep raising interest rates, which in turn boosted the dollar.
A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.
Higher interest rates are checking price gains as they are likely to curtail economic growth and increases in fuel demand, analysts said.
"A resilient labor market could buttress households' willingness and ability to continue consuming and therefore support corporate earnings and equities over the near term," investment strategy firm BCA Research said in a note.
"However ... a reacceleration of aggregate demand could lead to a second wave of inflation."
Supply concerns continued to weigh on markets, however, as operations at Turkey's oil terminal in Ceyhan halted after a major earthquake struck nearby early on Feb. 6.
Also, price caps on Russian products took effect on Feb. 5, with the Group of Seven (G7), the European Union and Australia agreeing on price limits of $100/bbl on diesel and other products that trade at a premium to crude, and $45/bbl for products that trade at a discount such as fuel oil.
Recommended Reading
Energy Transition in Motion (Week of March 24, 2023): Advancing Projects, Investment
2023-03-24 - Here’s a look at some of this week’s renewable energy news, including a $2.6 billion wind farm final investment decision.
Market Watchers: Oil, Gas Demand to Overtake Supply by Year’s End
2023-03-23 - Dennis Kissler, senior vice president of BOK Financial’s trading division, discusses supply and demand and the gambles ahead for the market.
Capstone Secures Follow-on Order for Microturbines
2023-03-23 - Horizon Power Systems commissioned two microturbines from Capstone Green Energy to power a remote natural gas compression facility in Wyoming’s Green River Basin.
Freehold Promotes Rob King to COO, Susan Nagy to VP Business Development
2023-03-22 - Freehold Royalties’ Susan Nagy will replace Rob King as vice president of business development following King’s promotion to COO.
Venezuela’s Maduro Taps PDVSA Head for Petroleum Ministry
2023-03-22 - Venezuela’s President Nicolás Maduro tapped PDVSA President Pedro Rafael Tellechea Ruiz as the OPEC country’s new petroleum minister to replace Tareck El Aissami.