Mubasher: Oil futures recovered nearly 1% earlier on Friday, but they were heading for their biggest weekly losses this year so far, after surges in crude stockpiles and worries about an economic slowdown brought about steep declines earlier in the week, according to Reuters.

At 6:54 am GMT, global benchmark Brent futures surged by 1.1% to $68.48 per barrel (pb), while US Nymex crude futures rose by 1.1% to $58.57 pb.

By 7:48 am GMT, Brent futures climbed by 0.78% to $68.29 pb, while Nymex crude futures jumped by 0.92% to $58.44 pb.

The forward price curve for Brent remains in backwardation, which means that prices for immediate dispatch is higher than those for future delivery.

This indicated a tighter market supply, while boosting the sentiment for producing and selling barrels promptly rather than storing it for later sale.

“Despite the big declines in the Brent flat price, the backwardation in the forward curve steepened this week,” US investment bank Jefferies was quoted by Reuters.

The Organization of the Petroleum Exporting Countries (OPEC) led supply restraints since the beginning of this year, with the aim of clearing a market glut and shoring up prices.

Adding to that, US sanctions on OPEC members Iran’s and Venezuela’s outbound crude shipments would further tighten supplies.

That said, the Friday rally in crude prices failed to offset the way bigger drops earlier in the week, sending oil futures on course to their worst weekly losses this year, with Brent set to post a more than 5% slump this week.

While the international crude benchmark was dragged down by the simmering trade dispute between the US and China dominated the news this week, swelling oil inventories in the US started pressuring prices in general.

In addition, a downturn in US manufacturing activity fanned further jitters over global demand growth, a note by CMC Markets chief strategist Michael McCarthy was cited by Reuters.

Outside North America, Asian refinery margins this week hit their lowest levels since at least the financial crisis more than a decade ago, as they struggle to weather an economic slowdown and oversupply from fuels.

“Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher,” futures brokerage research head London Capital Group Jasper Lawler was quoted by the news agency.

In conclusion, crude price surges will not last for long, according to Lawler.