Despite Economic Uncertainty, Oil Prices Are Poised For A Robust Week

On Friday, oil prices stayed stable despite mounting concerns about a U.S. economic slowdown and a sluggish rebound in China, but they were poised for substantial weekly gains as near-term supply remained curtailed as a result of outages in Turkey.

The world's top oil importer may take longer than anticipated to return to pre-pandemic levels of growth, based on Chinese inflation data that was less than anticipated.

An inversion in the yield curve, a typical indication of a slowdown, hit its deepest level since the 1980s, exerting additional pressure on the oil markets.

The likelihood of a slower-than-anticipated recovery in China, along with the possibility of a U.S. recession this year, could indicate a decline in oil consumption this year.

By 21:01 ET, Brent oil prices were unchanged at $84.25 per barrel, while West Texas Intermediate crude futures increased 0.2% to $77.84 per barrel (02:01 GMT). Both contracts were expected to gain approximately 5.5% and 6.3% per week, respectively.

Crude prices recovered strongly from recent lows this week after a disastrous earthquake in Turkey disrupted oil flows from Iraq and also suspended exports from the Ceyhan terminal, forecasting tighter supply in portions of Europe, Asia and North America.

It is unknown when shipments from the Ceyhan terminal will restart, as several operators in the region have declared force majeure.

Saudi Arabia increased its official crude sales price to Asia, indicating that the world's top oil producer anticipates a revival in Chinese demand, which boosted oil markets.

Additionally, crude markets profited from the dollar's depreciation in the context of rising uncertainty on the future course of U.S. interest rates. While a number of Federal Reserve officials said that interest rates are likely to rise in the coming months, higher-than-anticipated weekly unemployment claims data bolstered optimism that a weakening labor market could prevent the Fed from raising rates.

Next week's U.S. inflation figures for January will provide additional information on the possible direction of U.S. monetary policy. While it is anticipated that inflation will have decreased from the previous month, it is still anticipated to be substantially above the Fed's yearly objective.