Oil prices were little changed during Asian trade on Friday, though headed for their first weekly gain in five weeks, underpinned by a weaker US dollar and the possibility that Opec+ may agree to cut crude output when it meets on Oct 5.
Brent crude futures for November, which expire on Friday, inched down 13 cents or 0.15 per cent to $88.36 a barrel by 0625 GMT, after losing 83 cents in the previous session. The more active December contract was up seven cents, or 0.1pc, at $87.25.
US West Texas Intermediate (WTI) crude futures for November delivery rose 0.06pc, or by five cents, to $81.28 a barrel, after falling 92 cents in the previous session.
“A deteriorating crude demand outlook won’t allow oil to rally until energy traders are confident that Opec+ will slash output at the October 5 meeting,” Edward Moya, senior analyst with Oanda, said in a client note.
“The weakness with crude prices is somewhat limited as the dollar softens going into quarter-end.”
Both Brent and WTI are however on track to rise by about 3pc for the week, their first weekly rise since August, after hitting nine-month lows earlier in the week.
Oil prices were shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity.
For the month of September, Brent is poised to drop 8.3pc, down for a fourth month. For the third quarter, Brent will likely have plunged 23pc, its first quarterly loss since the fourth quarter of 2021.
WTI is set to fall 9.3pc in September, also its fourth monthly decline, and to drop 23pc during the quarter, the first quarterly slump since the period ending in March 2020 when Covid-19 slammed demand.
Analysts said the market appeared to have found a floor, with supply set to tighten as the European Union will ban Russian oil imports from Dec 5.
However, the key unknown is how much demand will drop as global growth slows in the face of aggressive interest rate hikes.
“Fundamentally, I still think prices are likely to move higher from here on tightening of Russian sanctions and with low global crude inventories, and the SPR (US Strategic Petroleum Reserve) supplies falling off,” said National Australia Bank commodities analyst Baden Moore.
“I expect Opec is well positioned to manage supply to offset risks to demand,” he said.
Leading members of the Organisation of the Petroleum Exporting Countries (Opec) and allies led by Russia, together called Opec+, have begun discussing an output cut ahead of their meeting on Wednesday, three people told Reuters.
Russia could suggest a cut of up to one million barrels per day, a person familiar with Russian thinking on the matter said earlier this week.
“In August, Opec+ production was estimated at around 3.37m barrels per day below target production levels. So in reality, any cut in supply will likely be smaller than whatever figure the group announces,” said ING Economics in a note.