(Bloomberg) — Oil edged higher after a punishing week as traders weighed up the outlook for global demand amid mounting recessionary concerns.
West Texas Intermediate rose above $79 a barrel in early Asian trade after collapsing by more than 7% last week to post the lowest close since mid-January. The decline was the US benchmark’s fourth consecutive weekly drop, the longest losing run this year.
Crude is on track for its first quarterly loss in more than two years as top central banks including the Federal Reserve raise interest rates aggressively, hurting the outlook for energy demand and sapping investors’ appetite for risk. The Fed’s tightening has helped to drive the US dollar to a record, making commodities priced in the currency more expensive for overseas buyers.
The slump in prices may induce the Organization of Petroleum Exporting Countries and its allies to consider intervening to stem the slide, either verbally or by announcing a reduction in output. Earlier this month, OPEC+ announced a token supply cut, and said members would monitor the market.
“At current levels, it appears the market is now pricing-in the typical impact of a deep recession,” Australia & New Zealand Banking Group Ltd. said in a note. “The sell-off could see OPEC intervene again.”
Elements, Bloomberg’s daily energy and commodities newsletter, is now available. Sign up here.