Oil prices rose on Friday as hopes for stronger Chinese demand and a weakening US dollar outweighed concerns about the impact of the global economic downturn and interest rate hikes on fuel use.
It seems that the US Federal Reserve is trying to slow down the economy to fight inflation and will continue to raise its short-term interest rate target.
Crude oil is supported by the European Union’s impending ban on Russian oil, as well as the recent 2 million bpd production cut agreed by the Organization of the Petroleum Exporting Countries and its allies, including Russia.
Brent, which came close to its all-time high of $147 in March, was on track for a weekly gain of 0.8%, while U.S. crude headed for a loss of about 1.5%. Both benchmarks dropped in the previous week.
Traders rallied their positions ahead of the weekend after WTI’s November contract expired, increasing volatility.
Fluctuations in the US dollar, which typically moves inversely with oil prices, contributed to volatile trade.
The dollar tumbled against a basket of currencies after a report said some Fed officials were signaling more unease with large rate hikes to fight inflation, even as they prepared for another rate hike for November.
Regarding the OPEC+ cut criticized by the US, the Saudi Arabian energy minister said the producer group did the right thing to ensure stable and sustainable oil markets.
Oil rose after Beijing said it was reportedly considering reducing the quarantine period for visitors from 10 days to seven days. There was no official confirmation from Beijing.
China, the world’s largest importer of crude oil, this year has focused on commercial and economic activities and reduced fuel demand while adhering to tight COVID-19 restrictions.
Meanwhile, energy services company Baker Hughes Co said the number of U.S. oil and gas rigs rose two to 771 in the week through October 21, an early indicator of future production.
U.S. oil rigs rose twice this week to 612, their highest since March 2020, while gas rigs remained unchanged at 157.
