Oil pared some of its second weekly decline as traders were waiting for clues about the outlook for interest rates from a speech later on Friday by Federal Reserve Chair Jerome Powell.
West Texas Intermediate futures rose above US$80 a barrel, but are headed for a weekly drop of 1.5 per cent. In addition to Powell's remarks, China on Friday moved to ease mortgage lending for some home buyers, state media Xinhua reported, in a move which could buffet the country's ailing property sector.
So far this week, crude has been hit by a double punch of factors impacting supply and demand. U.S. officials privately acknowledge they've gradually relaxed enforcement of some Iranian oil sales, while there are also talks over a possible easing of sanctions with Venezuela. Faltering growth in China and abysmal economic data in Europe have also sapped the outlook for demand.
Crude is now trading just below where it started the year, despite efforts by OPEC+ linchpins Saudi Arabia and Russia to boost prices by curbing supply. Expectations that the Federal Reserve isn't completely done with its campaign of monetary tightening have also added to headwinds. “Inventory draws have recently come through in a convincing fashion, and we expect the crude market to remain in deficit,” Morgan Stanley analysts, including Martijn Rats and Charlotte Firkins, wrote in a note. “However, oil demand likely slows in 2024 and can probably be fully met by non-OPEC supply additions.”Brent for October settlement advanced 1.4 per cent to 84.49 a barrel.