Oil Edges Higher After Rout With Demand Outlook to the Fore

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(Bloomberg) — Oil rose after a punishing week as traders weighed the outlook for global demand amid growing recession worries.

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West Texas Intermediate rose above $79 a barrel in early Asian trade after falling more than 7% last week to post its lowest close since mid-January. The drop was the fourth straight weekly decline for the US benchmark, the longest losing streak this year.

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Crude oil is on track for its first quarterly loss in more than two years as major central banks, including the Federal Reserve, raise interest rates aggressively, hurting the outlook for energy demand and dampening the investors’ risk appetite. The Fed’s tightening has helped push the US dollar to a record high, making commodities priced in the currency more expensive for foreign buyers.

Falling prices may prompt the Organization of the Petroleum Exporting Countries and its allies to consider intervening to stem the decline, either verbally or by announcing production cuts. Earlier this month, OPEC+ announced a cut in the supply of tokens and said members would monitor the market.

“At current levels, the market now appears to be pricing in the typical impact of a deep recession,” Australia & New Zealand Banking Group Ltd said. “The sale could bring OPEC into action again.”

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