Markets

Some analysts who are predicting a recession to occur either later this year or next year believe that the likely economic downturn would not be as severe as the 2008 or COVID-19-induced 2020 recessions, meaning that oil demand is likely to remain strong enough to support prices given the ongoing supply tightness.

While the coronavirus situation in China seemed to have improved somewhat over the week ending May 13, projections of struggles for economic growth kept the possibility of weakening demand in some traders' minds.

After negotiations during the week ending May 6 arrived at a plan that would allow certain countries to continue importing Russian crude beyond the end of this year, EU members are expected to agree to the winding-down of Russian imports.

Prices were pressured early in the week ending April 29 by the ongoing coronavirus-related lockdown in Shanghai and the potential demand destruction associated with the personal movement restrictions.

Even though supply tightness got a lot of attention over the week ending April 22 due to the ongoing disruptions to Russian exports related to its attacks on Ukraine as well as new round of blockades that shut in capacity in Libya, demand concerns took the focus.

With many markets closed on April 15 for the Good Friday holiday, futures prices for crudes and petroleum products jumped over the short week ending April 14 due in part to projections of lower output from Russia amid widespread sentiment that buyers will seek alternative supplies even if not forced to do so by sanctions.

The 1-3% week-on-week declines for ICE Brent, NYMEX WTI, and DME Oman over the week ending April 8 were much lower than the 10-14% drops of the previous week that had been due in large part to the US's announcement that it plans to release 1MM b/d of crude from its Strategic Petroleum Reserve (SPR) during May-Oct.

New lockdown measures in parts of Asia in an effort to minimize the spread of COVID-19 had market participants focused on demand destruction early in the week.

Supply-side concerns retook center stage during the week ending March 25 as drone and missile strikes on a refinery and other Saudi Arabian oil installations took place on March 20 and on March 25.

Early-week hopes for progress in talks between Ukraine and Russia were dashed by the end of the week, sparking expectations that more sanctions may be levied against Russia, further disrupting global energy flows.