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NEW YORK: Oil prices gained around a dollar on Friday, but global benchmarks were set for their biggest weekly decline since early August on growing recession fears following weak economic data from China, Europe and the United States.

Brent crude futures were at $76.95 a barrel, up 80 cent, or 1.1%, at 11:40 am EDT (1420 GMT). US West Texas Intermediate crude was up 78 cents, or 1.1%, at $72.24 a barrel.

The contracts hit 2022 lows earlier this week, and are set for weekly losses of around 10% each. That would be the biggest weekly decline for Brent crude since the week ending Aug. 5. A 14,000-barrel oil spill has forced the shutdown of the Keystone Pipeline supplying Canadian crude to the United States, briefly pushing oil prices higher on Thursday. However, both Brent and WTI gave up those gains to close lower in the previous session.

“What the market has been worrying about for months now is the recession risk,” said Walter Zimmerman, chief technical analyst at ICAP in Jersey City, New Jersey. “In the bigger scheme of things, today’s move hardly even registers.”

Zimmerman said US crude needs to rebound to about $85 before he believes the oil market has bottomed out.

Oil prices down

The market structure for Brent contracts has switched to contango, meaning contracts for near-term delivery are cheaper than for delivery in six months . That suggests less worry about the current supply situation due to weakened demand, and encourages traders to put barrels in storage.

In China, surging COVID-19 infections will likely depress economic growth in the next few months despite some restrictions being eased, economists said.

Economists polled by Reuters forecast the US economy will hit a short and shallow recession in the coming year. Forecasters expect the US Federal Reserve to raise rates by 50 basis points (bps) on Dec. 14.

The European Central Bank will also likely lift its deposit rate by 50 bps next week to 2%, even as the euro zone economy is believed to already be in recession.

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