Central banks are raising interest rates to tame inflation, spurring fears that rising borrowing costs could stifle growth. At the same time, mass COVID-19 testing in Shanghai this week was cause for worry over possible lockdowns that could also hit oil demand.
Brent crude rose $1.10, or 1.1%, to $105.75 a barrel by 1338 GMT, and U.S. West, Texas Intermediate crude, gained $2.14, or 2.1%, to $104.87.
Both benchmarks still should register weekly declines, following the first monthly decline since November. Prices had tumbled on Tuesday when Brent’s $10.73 drop was the contract’s third-biggest fall since it started trading in 1988.
“With more rate hikes to come and the U.S. likely in a technical recession, top-side market ambitions could be quite limited,” Stephen Innes, managing director at SPI Asset Management, told Reuters.
U.S. non-farm jobs data showed job growth increased more than expected in June, a sign of continued labor market strength that gives the Federal Reserve ammunition to deliver another 75-basis-point rate hike later this month.
Oil Has Soared Over the First Half of The Year
Brent crude came close to the record high of $147 after Russia launched its invasion of Ukraine in February. It added to supply concerns that some analysts expect to worsen.
“Economic worries may have roiled oil prices this week, but the market is still flashing bullish signals. This is because supply tightness is more likely to intensify from this point than to ease,” said Stephen Brennock of oil broker PVM.
Western bans on Russian oil exports have supported prices and sparked a re-routing of flows. The Organization of the Petroleum Exporting Countries (OPEC) and its allies struggle to deliver on pledged production increases.