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Brent futures rose 80 cents, or about 1%, to $78.22 a barrel at
1057 GMT. U.S. West Texas Intermediate crude (WTI) was at
$73.66, up 76 cents, also roughly 1%.
Both benchmarks have lost around a sixth of their value over the
last four weeks, and prices are on track for their fourth
straight week of losses.
"Oil prices are down slightly this year despite demand exceeding
our optimistic expectations," Goldman Sachs analysts said in a
note.
"Non-core OPEC supply has been much stronger than expected,
partly offset by OPEC cuts."
Prompt monthly spreads for both contracts have flipped to
contango, a structure that indicates nearby prices are lower
than those in future months reflecting healthy supply..
Oil's decline this week was mainly triggered by a steep rise in
U.S. crude inventories and production sustaining at record
levels, while signs of thawing demand in China also triggered
concerns.
But the precipitous drop on Thursday had some analysts
questioning whether the selloff was overdone, particularly in
light of escalating tensions in the Middle East that could
disrupt oil supplies and the U.S. vowing to enforce sanctions
against Hamas-backer Iran.
Another factor contributing to negative sentiment on Thursday
was the number of Americans filing new claims for unemployment
benefits increasing, and a slight contraction in industrial
production figures.
"Poor numbers maybe, but not disastrous, however it was enough
to tip the balance and carnage ensued with sell stops cascading
with triggers," said John Evans of oil broker PVM.
With Brent below $80 a barrel, a barrage of analysts now expect
OPEC+, principally Saudi Arabia and Russia, to extend their
voluntary cuts into 2024.
"It has become clearer that the oil balance for the remainder of
this year is not as tight as initially expected," ING analysts
said in a note.
"As things stand, the market is still expected to return to
surplus in 1Q24."
(Reporting by Natalie Grover, Florence Tan and Sudarshan
Varadhan; Editing by Michael Perry, Kim Coghill and David Evans)
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