Oil Records First Weekly Gains After Two Weeks of Losses

Oil prices stabilized in trading on Friday, August 22, but managed to record their first weekly gains after two consecutive weeks of losses, amid a return of concern among traders due to declining hopes for a quick peace agreement between Russia and Ukraine, "which has returned the risk premium to the market."

By the end of the session, Brent crude futures fell by about 4 cents to record $67.63 per barrel, while West Texas Intermediate crude contracts dropped by one cent to $63.51. Both crude types had closed up more than 1% in the previous session.

On a weekly basis, crude managed to recover, with Brent crude rising 2.7%, while West Texas crude achieved gains of 1.1%.

One of the main factors pressuring the market is the diminishing expectations regarding mediation efforts, as "traders expect more risks with dwindling bets on the success of the mediation efforts led by U.S. President Donald Trump to end the ongoing war, after hopes for a political settlement were one of the reasons for the pressures on prices during the past two weeks."

On the other hand, prices received strong support from the supply side, as "data from the U.S. Energy Information Administration showed a decline in crude inventories by 6 million barrels in the week ending August 15, compared to expectations of a decrease of only 1.8 million barrels, reflecting strength in demand."

Investors are now closely awaiting "the speech of Federal Reserve Chairman Jerome Powell during the Jackson Hole Economic Symposium in Wyoming, looking for new signals regarding the path of U.S. interest rates next month." As "any potential interest rate cut in the U.S. could support economic growth and increase demand for oil, giving prices more momentum."