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© Reuters. Aerial view of Transneft’s oil tank operator at the crude oil terminal Kozmino, near Nakhodka Bay in Russia. This is the June 13th 2022. This picture was taken using a drone. REUTERS/Tatiana Meel

By Rowena Edwards

LONDON, (Reuters) – Oil prices were steady Monday but failed to recover last week’s losses. The market balanced tightening supply with worries about global economic slowdown.

Futures fell 14 cents or 0.12% to $112.98 per barrel at 1246 GMT. For the first week in five, front-month prices fell 7.3% last Wednesday.

U.S. West Texas Intermediate crude oil was at $109.69 an increase of 13 cents or 0.12%. For the eighth week in a row, front-month crude prices fell 9.2%.

“Friday’s steep price fall can be seen as a delayed reaction to the concerns about recession that have already been weighing on the prices of other commodities for some time,” said Commerzbank (ETR:) analyst Carsten Fritsch.

Investors and analysts believe that a recession will be more likely following Wednesday’s approval by the U.S. Federal Reserve of the biggest interest rate hike in over a quarter century to limit inflation.

Last week, similar tightening measures were taken by both the Bank of England (BoE) and Swiss National Bank (SNB).

Brent crude oil futures touched Monday their lowest level in over a month. However, some analysts believe the slump will be temporary.

The supply of oil will continue to be tight, which will support high prices. Stephen Brennock, a PVM analyst, stated that Brent’s norm is still $120/bbl.

After Russia’s invasion of Ukraine, Western sanctions reduced Russia’s access to oil. Russia considers this a “special operations”.

China imported Russia 55% more than it did a year ago, which displaced Saudi Arabia as its top supplier. However, declining oil product exports are a result of China’s export quotas.

Oil prices have been supported by tight refined product markets.

Analysts are expecting limited summer increases by the Organization of the Petroleum Exporting Countries, (OPEC), and its partners. This group is collectively called OPEC+.

Libya’s oil production is still volatile after blockades in its east. The country’s output was recently estimated to be 700,000 barrels per day.

The prospects for Iranian sanctions relief, which could allow the country to see a substantial increase in its crude exports are dimming.

Some mitigation has been achieved for the tight supply by the United States’ release of its strategic petroleum resources. Baker Hughes Co. data on rig counts shows that the U.S. is seeing an increase in production.

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