NEW YORK (Oil Price) - Crude oil prices rose by 3% despite fears of a global recession which has pervaded the oil price narrative in recent weeks, weighing on prices.
Oil price rise was precipitated not by bullish production or supply outages nor by any significant demand outlook increases.
It was trading up $2.54 per barrel (+3.04%) at $86.08. While more than 3% rise on the day, the U.S. benchmark was trading down nearly $2 per barrel from last week.
The Brent benchmark was trading up $2.60 per barrel at that time (+2.92%) at $91.69—a more than $2 decrease from last week.
One supporting oil prices is the general market belief that OPEC+ will defend a particular price point—likely near $90 Brent. For OPEC+, which has struggled to meet its production targets even as prices rose to uncomfortable levels, production cuts would be a logical solution to falling prices as recession fears persist and concerns linger regarding China’s crude demand thanks to its restrictive zero-Covid policy.
This zero-Covid policy could trigger China’s fuel consumption to actually fall by 380,000 bpd this year compared to last year, according to a new prediction by Energy Aspects released on Friday. If realized, it would be China’s first drop in fuel consumption in two decades.
On Thursday, U.S. Secretary Jennifer Granholm suggested that the Biden Administration was considering further releases of the nation’s crude oil stockpiles (SPR) past October, although a Department of Energy official later denied this.