By Peter Nurse
Investing.com -- Oil prices gained Friday, but are still on course to register their first weekly loss in three weeks on concerns that global demand will be hit by subdued economic growth.
By 9:10 AM ET (1310 GMT), U.S. crude futures traded 2.7% higher at $108.92 a barrel, while the Brent contract rose 2.4% to $110.05 a barrel. Both benchmarks are on track to post declines for the week, with Brent seen down around 3% and WTI just a little less than 2%.
U.S. Gasoline RBOB Futures were up 2.5% at $3.8864 a gallon.
Oil prices are up more than 40% this year as supply concerns in the wake of Russia’s invasion of Ukraine combined with economies rebounding from the pandemic. However, confidence has been hit of late on demand concerns from weaker global growth, inflation, and China's COVID curbs.
The Organization of Petroleum Exporting Countries cut its forecast for world oil demand this year in its monthly report for May, released on Thursday.
The group of top producers now expects global demand to grow by an average of only 3.4 million barrels a day this year, down from a prior estimate of 3.7 million b/d.
The International Energy Agency was more pessimistic, predicting in its monthly report, also released Thursday, that demand would grow by around 1.8 million barrels a day this year, significantly lower than the 3.3 million b/d of growth they were expecting when we came into this year.
”Unsurprisingly, expectations for lower demand have been driven by the Covid related lockdowns in China, higher prices and more modest economic growth,” analysts at ING said, in a note.
Earlier Friday Beijing authorities were forced to deny speculation that the Chinese capital will go into lockdown as COVID cases increased, as restrictions in the country’s financial hub, Shanghai, drag on.
Elsewhere, foreign ministers from the G7 group of industrial nations agreed Friday to provide more aid and weapons to Kyiv, raising the pressure on Russia to abandon its faltering invasion of Ukraine.
However, doubts exist whether the European Union will be able to agree to ban the importing of Russian oil and gas as part of a broader sanctions package, with Hungary opposing the plan, which requires unanimity to pass.