Oil prices reversed previous losses in Asian trade on Friday and rose, supported by a weaker US dollar and falling diesel inventories.
Brent crude futures rose 31 cents, or 0.3%, to $94.88 a barrel as of 0622 GMT, while West Texas Intermediate (WTI) crude futures rose 36 cents, or 0.4%, to $89.47 a barrel.
OPEC+’s production cut will continue to support crude oil prices. The output cut may push crude oil prices higher, with a possible recovery in Chinese demand in the fourth quarter if Beijing loosens COVID restrictions.
China, the world’s largest importer of crude oil, is battling COVID flare-ups after a one-week National Day holiday earlier this month and just ahead of an important Communist Party Congress where President Xi Jinping is expected to extend his lead.
The country’s infection tally is small by global standards, but it is an important factor that heavily suppresses economic activity due to its zero-COVID policy.
Both Brent and WTI contracts are down nearly 3% this week after gains in the previous two weeks amid recession concerns.
Crude oil prices had a tough week. Fears of a global recession and inflation are forcing the Fed to over-tighten its policies, and the demand outlook is not very promising as China continues to grapple with the COVID lockdowns.
The Organization of the Petroleum Exporting Countries, known as OPEC+, and its allies announced a 2 million barrel-a-day cut to their oil production targets last week.
Saudi Arabia and the US, the de-facto leader of OPEC+, clashed over the decision. Saudi Arabia dismissed Washington’s criticisms and alleged that the US request to delay the cut by a month would have negative economic consequences.
The White House claimed that despite the presented analysis showing that the reductions could hurt the global economy Saudis were putting pressure on other OPEC members to vote.
Officials of both countries are expected to resume talks soon.
Oil prices were also supported by the sharp decline in US distillate stocks, as demand for heating fuels is expected to increase as winter approaches.
Distillates, including diesel and heating fuel, fell 4.9 million barrels to 106.1 million barrels, the lowest level since May, compared to expectations for a decline of 2 million barrels, the U.S. Energy Information Administration (EIA) said on Thursday.
This negativity appears amid a larger-than-expected increase in US crude stockpiles, as well as a surge in gasoline inventories.
