Oil prices rose on Friday but were on track for a weekly decline amid fears of a sharp rise in interest rates that would hurt global growth and dampen fuel demand.
Brent crude futures were up 24 cents, or 0.3 percent, at $91.08 a barrel by 0315 GMT, but were down 1.9pc for the week so far.
U.S. West Texas Intermediate (WTI) crude futures rose 10 cents, or 0.1pc, to $85.20 a barrel, but were down 1.9% on a weekly basis.
“This morning’s recovery in oil prices can only be described as a short-term correction, as the Fed raises interest rates by 75bp or 100bp next week,” said Leon Lee, an analyst at CMC Markets. Will.”
“Although the probability of a 100 bp rate hike is relatively low, it will bring uncertainty to market sentiment. Hence, there is still a risk that oil prices could go lower next week.
Both benchmarks are heading for a third straight weekly loss, hurt in part by a stronger US dollar, which makes oil more expensive for buyers using other currencies. The dollar index edged lower on Friday but remained near last week’s high of 110.
Investors are bracing for a U.S. rate hike next week after data showed core inflation is picking up, and amid growing fears of a global recession.
Markets were also rattled by the International Energy Agency’s outlook for near-zero growth in oil demand in the fourth quarter due to a slowdown in demand from China.
“Oil fundamentals remain largely bearish as the outlook for China’s demand remains a big question mark and the inflation-fighting Fed appears to be on the cusp,” Onda analyst Edward Moya said in a note. is poised to weaken the American economy.”
Analysts said sentiment was dampened by comments from the U.S. Department of Energy that the strategic petroleum reserve was unlikely to be replenished until after fiscal 2023.
On the supply side, the market found some support on diminishing expectations for a rebound in Iranian crude, as Western officials ruled out the prospect of revitalizing the nuclear deal with Tehran.
Commonwealth Bank analyst Vivek Dhar said that supported the bank’s view that oil markets would tighten by the end of the year and that Brent would return to $100 a barrel in the fourth quarter.
CMC’s Lee added that oil prices could also be supported in the fourth quarter as OPEC+ members will discuss production cuts at their October meeting, and uncertainty over oil and gas supplies from Russia. In the midst of the situation, Europe will face an energy crisis.
