By Peter Nurse
Investing.com — Oil prices fell Friday, on course for a weekly loss on mounting concerns about a global slowdown as well as a potential supply glut.
By 09:25 ET (13:25 GMT), futures traded 0.6% lower at $89.95 a barrel, while the contract fell 0.9% to $95.72. Both benchmarks are on track to drop well over 3% this week.
U.S. were down 0.9% at $2.9987 a gallon.
A sharp drop in U.S. on Wednesday helped generate two days of gains this week, but the overall tone remains negative with global recession and demand destruction fears front and center.
These concerns were illustrated by weak economic readings from major importer China earlier in the week, while the U.S. has already entered a technical recession, the Bank of England has warned of a prolonged slowdown in the U.K. and the Eurozone is unlikely to be too far behind.
Turning to the supply side, speculation over the revival of the Iran nuclear deal has weighed heavily this week, with the Biden administration currently studying Iran’s response to a European Union proposal.
While these negotiations have had several false starts over the past year, it would currently suit the U.S. administration for more oil to be supplied to the global market to bring down prices.
The lifting of Western sanctions on Iran could release over 1 million barrels per day of supply into the global market.
Additionally, reports indicated that Russia’s exports rose again in July, finding a way to energy-hungry emerging markets after being rejected by Europe, the U.S., and Japan.
“Stubborn Russian oil output and weaker than expected demand growth mean the oil market is likely to remain in surplus for the remainder of this year and into early next year,” said analysts at ING, in a note, ”which should limit the upside in oil prices.”
As a consequence, the bank lowered its Brent forecasts, cutting its third and fourth quarter 2022 forecasts to $100 a barrel and $97/bbl, from$118/bbl and $125/bbl, respectively, while its full-year 2023 forecast has been cut to $97/bbl from $99/bbl.
U.S. oil rig numbers from are due later in the session, and they should provide clues over future U.S. supply, while should provide insight into investors’ thinking.