WTI remains negative below $77.50 and remains on track for modest weekly losses

• WTI suffers some selling pressure on Friday and breaks a two-day winning streak.
• Concern about the slowdown in global demand puts downward pressure on the price of oil.
• Concerns about supply disruptions in the Middle East should help limit deeper losses.

US West Texas Intermediate (WTI) crude oil prices fall on the last day of the week and move away from a new monthly high, around the $78.75 area touched on Thursday. The price of black gold remains under pressure during the first half of the European session and is currently trading near the daily low, around $77.50.

Investors remain concerned about worsening economic conditions around the world, especially after Japan and the United Kingdom entered technical recession during the fourth quarter of 2023. In addition, expectations that rising borrowing costs could slow economic activity and reduce fuel demand in the world's largest oil consumer, China, turn out to be key factors putting downward pressure on oil prices.

That said, signs of reduced global supply, due to disruptions in the Middle East, could continue to support the price of the commodity and help limit any significant corrective declines. Indeed, the war between Israel and Hamas has yet to show signs of de-escalation, while attacks on commercial ships by the Iran-aligned Houthi rebels in Yemen have raised concerns about the flow of trade across the critical navigable waterway of the Red Sea.

Separately, the Energy Information Administration reported Thursday that U.S. crude oil inventories rose by 3.51 million barrels in the week through Feb. 16, down sharply from the sizable previous accumulation of 12 million barrels. This reaffirms expectations that demand from US refineries will improve following recent disruptions and justifies caution before opening bearish positions on black gold.

Even from a technical perspective, crude oil prices have been oscillating in a familiar range for the last week or so. This points to investors' indecision about the next directional move. However, the price of oil remains on track to post modest weekly losses for the first time in the previous three.