Oil prices settled up on Friday as hopes of stronger Chinese demand and a weakened US Dollar outweighed concerns about a global economic downturn and the impact of interest rate rises on fuel use.
Brent crude settled at $93.50 a barrel after rising by $1.12 or 1.2 per cent, while the US West Texas Intermediate crude (WTI) settled at $85.05 a barrel after an expansion of 54 cents or 0.6 per cent.
Moves that China was considering cutting the quarantine period for visitors to seven days from 10 days served as a booster for the market.
Although there has been no official confirmation from the country, but the possibility of this lifted prices on Friday.
This is coming as the world’s largest crude importer continues to stick to strict COVID-19 curbs this year, weighing heavily on business and economic activity and reducing demand for fuel.
Support also came as the American Dollar eased against a basket of currencies after a report said some US Federal Reserve officials had signalled greater unease with big interest rate rises to fight inflation.
The Dollar index, which measures the greenback’s strength against a basket of six currencies, was 0.7 per cent lower at 112.17, down from a three-week high of 113.95.
The US central bank is trying to slow the economy and will keep raising its short-term rate target, Federal Reserve Bank of Philadelphia President Patrick Harker said on Thursday in comments that weighed on oil.
Despite its retreat on the Fed headlines, the Dollar index remains near a two-decade high.
US President Joe Biden’s announcement of a 15-million-barrel Strategic Petroleum Reserve (SPR) release (the remaining volume of the 180 million barrels initially suggested) failed to stir the market, and the country’s tone with the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) after last week’s fiery exchanges have calmed down.
After criticism from the United States, Saudi Arabia’s energy minister said the producer group was doing the right job to ensure stable and sustainable oil markets.
Meanwhile, the US oil and gas rig count, an early indicator of future output, rose two to 771 in the week ending October 21, energy services firm Baker Hughes Co said. Out of this, oil rigs rose two to 612 this week, their highest since March 2020.