Midland oil rig

Sharik Khan

(Reuters) – Oil prices tumbled after volatile trading on Friday, with both indexes posting their biggest weekly declines in months as rising recession fears offset any supply worries following weak economic data from China, Europe and the US.

U.S. crude oil (WTI) fell $0.44 to $71.02 a barrel, a new low for 2022. Brent crude fell $0.05 to $76.10 a barrel.

“Any concerns about supply are secondary to concerns about the economy,” said Mizuho analyst Robert Yauger.

Oil prices found some support and rose more than 1% early in the session after Russian President Vladimir Putin said the world’s biggest energy exporter could cut production in response to a cap on crude oil export prices.

However, slightly stronger-than-expected US producer price increases in November and news of a partial relaunch of the Keystone oil pipeline wiped out those gains and pushed benchmarks down by more than a dollar. Keystone closed earlier this week after spilling 14,000 barrels of oil in Kansas.

The US producer price index rose slightly more-than-expected in November, amid a surge in service costs, the US Department of Labor said in a report.

The increase could make it more likely that the Federal Reserve will “step on the gas” on interest rate hikes, fueling fears of a looming recession, Yauger said.

Both raw references showed weekly losses of about 10% each. It was the biggest weekly drop since April for US WTI futures and since early August for Brent.

Both Yauger and Walter Zimmerman, ICAP’s chief technical analyst, have warned that if US oil falls below $70 a barrel, it could fall to $60 in the coming sessions.

(Reporting by Sharik Khan in Bangalore; additional reporting by Florence Tan in Singapore and Mohi Narayan in New Delhi).

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