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Brent crude futures were up $1.84, or 1.9%, to $96.51 a barrel
at 0740 GMT. The contract is headed for a weekly climb of more
than 0.5%.
U.S. West Texas Intermediate (WTI) crude futures were up $1.94,
or 2.2%, at $90.11 a barrel, on course for a weekly gain of more
than 2%.
Both contracts rose as the dollar slipped. A weaker dollar
boosts oil demand as it makes the commodity cheaper for those
holding other currencies.
While demand concerns weighed on the market, supply is still
expected to be tight, with Europe's upcoming embargoes on
Russian oil starting and a slide in U.S. crude stockpiles.
"The increasingly gloomy macro outlook is providing some strong
headwinds to the oil market and without the supply cuts
announced by OPEC+ back in October, we would likely have been
trading at much lower levels," said Warren Patterson, ING's Head
of Commodities Strategy.
The OPEC+ cuts have provided some stability to the market in the
short term, though this is likely to change once the EU's ban on
Russian oil comes into force next month for crude and in
February for refined products, he added.
Fears of a recession in the United States, the world's biggest
oil consumer, grew on Thursday after Federal Reserve Chairman
Jerome Powell said it was "very premature" to be thinking about
pausing interest rate hikes.
"The spectre of further rate hikes dimmed hopes of a pick-up in
demand," ANZ Research analysts said in a note.
The Bank of England warned on Thursday that it thinks Britain
has entered a recession and the economy might not grow for
another two years.
ANZ analysts pointed to signs of weaker demand in Europe and the
United States with people driving less and Amazon warning of
weaker sales, which could dampen demand for distillate.
Underscoring demand concerns, Saudi Arabia lowered December
official selling prices (OSPs) for its flagship Arab Light crude
to Asia by 40 cents to a premium of $5.45 a barrel versus the
Oman/Dubai average.
The cut was in line with trade sources' forecasts, which were
based on a weaker outlook for Chinese demand.
China stuck to its strict COVID-19 curbs as cases rose on
Thursday to their highest since August.
(Reporting by Sonali Paul in Melbourne and Jeslyn Lerh in
Singapore; Editing by Richard Pullin and Mark Potter)
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