Oil headed for a second weekly loss on signs of improving supply and a deteriorating economic situation in China, the biggest importer.

West Texas Intermediate futures were steady near $79 a barrel Friday, and are nearly 3% lower this week. Signs of a thaw in US relations with sanctioned oil producers Iran and Venezuela has undercut a tightening in global supplies, while faltering growth in China has sapped the outlook for demand.

Crude is now trading just below where it started the year, despite efforts by OPEC+ linchpins Saudi Arabia and Russia to boost prices by curbing supply. Expectations that the Federal Reserve isn’t completely done with its campaign of monetary tightening have also added to headwinds.

Investors in the US are pulling back their exposure to oil, with declining holdings of contracts for WTI pushing aggregate open interest to the lowest since January. The US Oil Fund ETF, the largest oil exchange-traded fund in the US, posted its biggest outflow since 2020 on Wednesday, shedding over $180 million.

“While there are signs of potential supply growth from a couple of OPEC producers, the market should continue to draw inventories for the remainder of the year,” said Warren Patterson, head of commodities strategy at ING Groep NV. That suggests “there is still further upside for prices,” he said.

Investors will be watching for further clues on the path of US monetary policy when Fed Chair Jerome Powell speaks at a gathering of global central bankers in Jackson Hole, Wyoming later on Friday.

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