Oil headed for its biggest weekly decline since July as a streak of disappointing economic data added to fears a global recession is coming.
Futures in New York rose on Friday but are down 5.1% this week. U.S. payrolls missed estimates, whipsawing the dollar and lifting equity markets. A key measure of American service-industry activity dropped to the lowest in three years, while an employment gauge registered its weakest reading in more than five years.
The deteriorating U.S. economy -- and more signs of weakness in China and Germany -- are worsening an already fragile consumption outlook for fuels. OPEC member Nigeria warned Thursday that oil demand will be “very challenging” next year. Those concerns, combined with a quick return of shuttered Saudi production, have evaporated oil’s gains following the Sept. 14 attacks on the kingdom.
“Oil markets are focusing on severe macro risks, but are also shrugging off the most heightened geopolitical risk in years,” Ed Morse, an analyst at Citigroup Inc., wrote in a report. “As markets shed just about any consideration of supply risk, attention stays focused on what is nearly universally expected to be a significantly weaker year of demand growth.”
West Texas Intermediate for November delivery rose 65 cents, or 1.2%, to $53.10 a barrel on the New York Mercantile Exchange as of 9:21 a.m. local time.
Brent for December increased 1.5% to $58.56 a barrel on the ICE Futures Europe Exchange, and is down 5.5% for the week. It traded at a $5.65 premium to WTI for the same month.
A key U.S. factory index fell to a 10-year low on Tuesday as businesses held back investments amid slowing global growth and the prolonged U.S.-China trade war. Data on Wednesday showed hiring at U.S. companies cooling, while quarterly sales figures from automakers are adding to the concern.
Washington and Beijing are set to restart high-level trade negotiations next week, but the chances of a short-term breakthrough don’t appear to be high. Meanwhile, the U.S. imposed tariffs on European goods including aircraft and dairy products this week.
© 2019 Bloomberg L.P.