Crude oil futures are trading higher for the week, but Friday’s steep sell-off is threatening to erase all of those earlier gains. After reaching a one-month high on Thursday, prices are getting hit hard ahead of the weekend as investors continue to express concerns over demand growth after weak Asian economic data fuelled uncertainty about the region’s economic outlook. Furthermore, traders continued to grow impatient with OPEC+’s inability to make a decision about additional production cuts.
Despite Thursday’s friendly U.S. Energy Information Administration (EIA) Weekly Inventories report, prices turned lower on rising market uncertainty, suggesting that traders feel there is just too much risk in the market at this time to hold profitable long positions over the weekend.
The news wasn’t all bearish this week. Three factors contributed to this week’s earlier strength. They were fresh stimulus from China, a drop in new coronavirus cases at the epicenter of the outbreak and supply concerns in Venezuela and Libya.
China Cuts Benchmark Lending Rate
China’s more to cut its benchmark lending rate on Thursday helped ease worries about slowing demand in the world’s second-biggest oil consumer and largest crude oil importer. The move came as no surprise since it was already priced into the market. Earlier in the week, China’s central bank made moves that set up today’s rate cut.