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Oil prices are stabilizing; China demand hopes outweigh recession worries

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Oil prices stabilized on Friday as hopes of stronger Chinese demand and a weaker U.S. dollar outweighed worries about a global economic slowdown and the impact of rising interest rates. on fuel consumption.

To fight inflation, the U.S. Federal Reserve is trying to slow the economy and will continue to raise its short-term rate target, Federal Reserve Bank of Philadelphia President Patrick Harker said Thursday in remarks that weighed on oil.

But crude is gaining support thanks to an impending European Union ban on Russian oil, as well as the recent production cut of 2 million barrels per day agreed by the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+.

Brent settled at $93.50 a barrel, up $1.12 or 1.2%. U.S. West Texas Intermediate (WTI) crude settled at $85.05 a barrel, up 54 cents, 0.6%. During the session, both benchmarks were down more than a dollar.

Brent rose 2% on the week, while WTI fell around 0.7%.

Traders were lining up ahead of the weekend after the WTI contract expired in November, increasing volatility.

“The bias is to play the weekend on the long side,” said John Kilduff, partner at Again Capital LLC in New York.

Fluctuations in the US dollar, which generally moves inversely to oil prices, have added to trade volatility. [USD/]

The dollar eased against a basket of currencies after a report said some Fed officials signaled greater unease over steep interest rate hikes to fight inflation, as even that they were lining up another big rate hike for November.

Brent, which hovered near its all-time high of $147 in March, was on track for a weekly gain of 0.8%, while U.S. crude was heading for a loss of around 1.5%. Both benchmarks fell the previous week.

Regarding the OPEC+ cut, which has been criticized by the United States, the Saudi energy minister said the producer group was doing a good job of ensuring stable and sustainable oil markets.

On Thursday, oil gained after Bloomberg News reported that Beijing was considering reducing the quarantine period for visitors from 10 days to seven days. There has been no official confirmation from Beijing.

“The reflex price action provided a useful insight into what to expect once more punitive restrictions were lifted,” Stephen Brennock of oil broker PVM said of the market rally after the report.

China, the world’s biggest crude importer, has stuck to strict COVID-19 restrictions this year, weighing heavily on trade and economic activity and reducing demand for fuel.

Meanwhile, the number of U.S. oil and gas rigs, an early indicator of future production, rose by two to 771 in the week to Oct. 21, energy services firm Baker Hughes Co said. . [RIG/U]

U.S. oil rigs rose two to 612 this week, their highest level since March 2020, while gas rigs were unchanged at 157.