Oil prices are still on track to finish out the week in the red, but crude prices saw a strong rally on Friday morning as the market attempts to rebalance itself from the disconnect between bearish sentiment and fundamentals.
Much of the previous week’s price slide can be attributed to a disappointing crude oil demand look out of China on the back of lackluster manufacturing activity, compounded by bank sector stressors in the United States. Nevertheless, little has changed in the way of oil market fundamentals, and the market is looking to make that correction.
The price of WTI crude oil shot up $2.97 per barrel (+4.33%) on Friday morning to $71.44, undoing much—but not all—of the week’s earlier losses. Brent crude oil rose $2.89 (+3.99%) per barrel to $75.39 by 11:16 a.m. ET.
The price rebound follows Thursday’s notice from Saudi Aramco that it had lowered its Official Selling Price (OSP) of all crude grades to its prized market, Asia, for June 2023. It also comes despite market suspicions that Russia hasn’t cut production as much as it said it was going to—likely because Russia must keep the oil—and cash—flowing to support its shaky economy.
The crude oil price rally also came despite strong U.S. labor data that could prompt the Federal Reserve to continue hiking interest rates—a usual stressor on oil prices.
WTI prices are still about $40 per barrel under where they were this time last year, shortly after Russia invaded Ukraine, and $9 per barrel under where they were a month ago today, despite increased pledges from the OPEC+ group to cut even more crude oil off its production quotas.
News source: Oilprice.com