Oil rose on Friday as the dollar eased and supply risks persisted, although recession fears and COVID outbreaks in China kept prices in check.
Brent crude futures were up $1.84, or 1.9%, at $96.51 a barrel at 0740 GMT. The contract is heading for a weekly increase of more than 0.5%.
U.S. West Texas Intermediate (WTI) crude futures rose $1.94, or 2.2%, to $90.11 a barrel, on track for a weekly gain of more than 2%.
Both contracts rose as the dollar slid. A weaker dollar boosts demand for oil because it makes the commodity cheaper for those who hold other currencies.
While demand concerns have weighed on the market, supply is still expected to be tight, with the start of European embargoes on Russian oil and a drop in US crude inventories.
“The increasingly gloomy macroeconomic outlook is creating strong headwinds in the oil market and had it not been for the supply cuts announced by OPEC+ in October, we would likely have been trading at much lower levels,” said Warren Patterson, Head of Commodities Strategy at ING.
The OPEC+ cuts have brought some stability to the market in the short term, although that should change once the EU ban on Russian oil comes into effect next month for crude and in February for crude oil. refined products, he added.
Fears of a recession in the United States, the world’s biggest oil consumer, grew on Thursday after Federal Reserve Chairman Jerome Powell said it was “very premature” to consider pausing interest rate hikes. interest rate.
“The specter of further rate hikes has clouded hopes for a recovery in demand,” analysts at ANZ Research said in a note.
The Bank of England warned on Thursday that it believes Britain has entered a recession and the economy may not grow for two years.
ANZ analysts pointed to signs of falling demand in Europe and the United States, with people driving less and Amazon warning of lower sales, which could dampen demand for the distillate.
Underscoring demand concerns, Saudi Arabia cut December official selling prices (OSPs) of its flagship Arabian light crude to Asia by 40 cents to a premium of $5.45. per barrel compared to the Oman/Dubai average.
The reduction was in line with forecasts from trade sources, which were based on a weaker outlook for Chinese demand.
China stuck to its strict COVID-19 restrictions as cases rose Thursday to their highest level since August.