Oil had a one-day spurt on Friday following the interest rate remarks by Fed Chair Jay Powell, but the gain couldn’t offset the losses from the previous four sessions.
Powell stated on Friday that the “time has come” for the US central bank to begin lowering its benchmark lending rate, though the timing and extent of future policy easing will depend on incoming data (as it always does).
West Texas Intermediate crude oil was up 2.7% at $74.96 a barrel in late afternoon trade on Friday, but it still ended with a weekly loss of 2.15%. Brent also rose on the day, ending at $78.22 a barrel, but was down 1.7% over the week.
Oil received a boost from the weaker dollar and lower bond rates, which lowered holding costs and raised hopes that a rate cut would boost demand.
However, these hopes seem rather forlorn given the ongoing uncertainty about demand.
“Falling product prices point to soft demand, potentially worsened by the prospect of an expected increase in supply from non-OPEC producers ahead of year-end,” Saxo Head of Commodity Strategy Ole Hansen said in his usual weekly note on Friday.
Weak refinery margins in the US and Europe, along with easing crude demand, make it “increasingly unlikely” that OPEC+ will unwind voluntary production cuts in October, according to Hansen.
Chinese demand is weak—the country’s oil imports have fallen for four consecutive months up to July.
In fact, apparent oil demand fell 8% year-on-year in July, based on Chinese government data, and as much as 800,000 barrels per day of oil may have been sent into storage.
Meanwhile, the number of oil rigs in the US remained unchanged at 483 for the week ended last Friday, according to energy services company Baker Hughes.
The count for gas rigs fell by one to 97 on a weekly basis, while miscellaneous rigs remained unchanged at five.
A year earlier, the US had 512 oil rigs, 115 gas rigs, and five miscellaneous rigs in operation, according to company data. Overall, 585 rigs were operating in the US last week, down from 632 a year earlier.