Pressured week for oil

Oil has been on a downward trend this week on concerns about economic activity despite easing news from China. Oil fell nearly 10 percent for the week as concerns about the economic outlook overshadowed China’s easing of strict virus restrictions and a U.S. crude outage. U.S. crude traded around $72 a barrel on Friday. The oil market also faces a persistent illiquidity problem that has left prices prone to wild swings. The Keystone pipeline shutdown has disrupted U.S. crude flows, but investors are betting that at least one section of the pipeline will be back online soon. “Wide-running fears of a broader recession, accompanied by global monetary policy tightening, have pulled oil down and given the lags in monetary policy, there could be a ‘tightening wall,’” said Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank. Crude is on track for its first back-to-back quarterly decline since mid-2019 amid a worsening economic outlook as central banks tighten monetary policy, even as U.S. Treasury Secretary Janet Yellen sees the U.S. continuing to avoid a recession. Investors are also closely watching developments related to Russian oil, which has seen tankers get stuck in Turkish territorial waters over a dispute over insurance. There is widespread concern among oil-dependent economies about the cap imposed by the G7, according to Oman’s energy minister, citing concerns that it could involve other countries. Still, Russia sees the price cap having limited impact on crude production.