Oil prices held steady during Asian trade on Friday, but headed for their first weekly gain in five weeks, bolstered by a weak US dollar and the possibility of OPEC+ agreeing to cut crude production at its Oct.
Brent crude futures for November, which expires Friday, fell 10 cents, or 0.1%, to $88.39 a barrel as of 0303 GMT, after losing 83 cents in the previous session. The more active December contract was unchanged at $87.18.
West Texas Intermediate (WTI) November crude futures rose 0.1%, or 9 cents, to $81.32 a barrel after falling 92 cents in the previous session.
The worsening crude demand outlook will not allow oil to rise until energy traders are confident that OPEC+ will cut production at its Oct. The weakness with crude prices is somewhat limited as the dollar softens going into the last quarter.
However, both Brent and WTI are on their way up about 3% for this week, posting their first weekly gains since August after hitting nine-month lows earlier in the week.
Oil prices were supported by the dollar falling from a 20-year high earlier in the week. A weaker dollar makes dollar-denominated oil cheaper for buyers who hold other currencies, increasing demand for the commodity.
For all of September, Brent is set to drop by 8.4%, down for a fourth month. In the third quarter, Brent fell 23%, the first quarter annual decline since the fourth quarter of 2021.
WTI is also down 9.3% in September, its fourth monthly drop, and fell 23% this quarter, the first quarterly drop since the period ended in March 2020, when COVID-19 halted demand.
Analysts said the market has found some ground as supply tightens as the European Union will ban oil imports from Russia from December 5. However, what remains unknown is how much demand will fall as global growth slows in the face of aggressive rate hikes.
Basically, it’s not so clever to think that prices could move higher from here due to the tightening of Russian sanctions, lower global crude inventories, and falling SPR (US Strategic Petroleum Reserve) supplies.
Sources said the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies began discussing a production cut ahead of their meeting on Wednesday.
A person familiar with the Russian way of thinking on the matter said earlier this week that Russia could propose cuts of up to 1 million barrels per day.
OPEC+ production in August is estimated to be around 3.37 million barrels per day below the targeted production levels. So, in reality, any cuts in supply will likely be smaller than the figure announced by the group.
