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Brent crude futures were down 94 cents, or 1.1%, at $83.73 a
barrel at 1015 GMT on Friday, while U.S. West Texas Intermediate
crude futures were 99 cents, or 1.3%, lower at $77.62.
Both benchmarks are on track to end the week lower, after two
straight weeks of gains, but indications of healthy fuel demand
and supply concerns could revive prices in coming days with
physical oil prices robust.
U.S. Federal Reserve policymakers should delay interest rate
cuts by at least another couple of months to see if a recent
uptick in inflation signals stalling progress toward price
stability or is just a bump in the road, Fed Governor
Christopher Waller said on Thursday.
Higher interest rates for longer could slow economic growth,
which could curb oil demand in the world's largest oil consumer.
But some analysts say demand has remained largely healthy,
including in the U.S.
Analysts at ANZ research said U.S. crude oil inventories rose at
a less-than-expected rate last week, while run rates at
refineries ended a streak of declines and may increase in coming
weeks.
JPMorgan's high frequency demand indicators are showing oil
demand rising 1.7 million barrels per day month over month
through Feb. 21, its analysts said in a note on Friday.
"This compares to 1.6 mbd increase observed during the prior
week, likely benefitting from increased travel demand in China
and Europe," the analysts said.
Oil benchmarks pared some of their Thursday gains after Waller's
comments.
The U.S. Fed has held its policy rate steady in the 5.25%-5.5%
range since last July, and minutes of its policy meeting last
month show most central bankers were worried about moving too
quickly to ease policy.
Waller also pushed back on the idea that the Fed risks sending
the economy into recession if it waits too long to cut rates,
saying the Fed can afford to "wait a little longer".
Oil futures had settled higher on Thursday as hostilities
continued in the Red Sea, with Iran-aligned Houthis continuing
attacks near Yemen.
Israel Prime Minister Benjamin Netanyahu's war cabinet has
approved sending negotiators to truce talks taking place in
Paris on Friday as pressure mounts in the Middle East, according
to a source briefed on the matter and Israeli media.
(Additional reporting by Sudarshan Varadhan; Editing by Tom
Hogue, Michael Perry and Kim Coghill)
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