Oil prices rise but head for fourth week in red on demand concerns

Investing.com-- Oil prices rose in Asian trade on Friday but were headed for a fourth straight week of losses as concerns over slowing economic growth and demand largely offset a brief boost from worsening tensions in the Middle East.

Crude prices tumbled in the prior session, cutting short a brief recovery after a raft of weaker-than-expected purchasing managers index data from the U.S. ramped up concerns over a slowdown in global economic growth. The data followed dismal readings from top oil importer China. 

The weak economic prints saw markets largely look past heightened tensions in the Middle East after the killing of a Hamas leader in Iran earlier in the week. Concerns over a bigger war in the region helped crude prices recover from near two-month lows.

Oil markets took middling cues from a meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+), where the cartel made no changes to its production policies and reiterated that it could pause plans to increase output from October. 

Brent oil futures expiring in October rose 0.4% to $79.84 a barrel, while West Texas Intermediate crude futures rose 0.4% to $75.71 a barrel by 21:24 ET (01:24 GMT). 

Oil heads for weekly losses as growth concerns mount 

Brent and WTI prices were set to lose between 0.4% and 0.9% this week, after sinking to near two-month lows in the week. 

Weakness in oil was driven chiefly by growing concerns that an economic slowdown will batter oil demand in the coming months. This was furthered by weak manufacturing PMIs from both the US and China this week.

China remained a major pain point for oil markets, as Beijing provided scant details on how it planned to shore up economic growth in the world’s biggest oil importer. 

In the U.S., the Federal Reserve signaled a potential interest rate cut in September. But traders feared that the cut would be too late for the U.S. economy to still see a soft landing. 

Middle East tensions remain in focus 

Crude prices did curb a bulk of their weekly losses on concerns over an all-out war in the Middle East.

Israel allegedly killed Hamas leader Ismail Haniyeh in Iran, ramping up concerns over retaliation by the Palestinian group and Iran.

Earlier in the week, Israel said it had killed Hezbollah commander Fouad Shukur in an airstrike, drawing ire from the Lebanon-based, Iran-backed group.

The prospect of an all-out war between Israel and its surrounding states saw traders attach some risk premium to oil prices, on the prospect of potential supply disruptions in the Middle East.