Oil prices rise 24 cents, but down 1.9 pc on weekly basis

Oil prices rise 24 cents, but down 1.9 pc on weekly basis

Brent crude futures were up 24 cents, or 0.3 per cent, to $91.08 a barrel at 0315 GMT, but were down 1.9 per cent for the week so far.

U.S. West Texas Intermediate WTI crude futures rose 10 cents, or 0.1 per cent, to $85.20 a barrel, but were down 1.9 per cent on a weekly basis.

The morning rebound for oil prices can only be described as a short-term correction as the Fed will raise interest rates by 75 bp or 100 bp next week, according to Leon Li, an analyst at CMC Markets.

The probability of a 100 bp rate hike is relatively small, but it would bring uncertainty to market sentiment. There is still a chance that oil prices could drop below next week. The dollar index went down on Friday but held near last week's high above 110.

The investors are bracing for a US rate hike next week, as data shows inflation is broadening out and there are growing concerns of a global recession.

The International Energy Agency forecast for nearly zero growth in oil demand in the fourth quarter due to a weaker demand outlook for China, which rattled the market.

Oil fundamentals are mostly bearish, as China's demand outlook remains a big question mark and as the Fed seems poised to weaken the U.S. economy, OANDA analyst Edward Moya said in a note.

Analysts said that it was unlikely that the Strategic Petroleum Reserve will be filled until after fiscal 2023 because of comments by the U.S. Department of Energy.

On the supply side of the market has found some support on the dwindling expectations of a return of Iranian crude, as Western officials played down the prospects of a nuclear accord with Tehran.

Commonwealth Bank analyst Vivek Dhar said that the bank believes that oil markets will tighten by the end of the year and Brent will return to $100 a barrel in the fourth quarter.

In the fourth quarter, oil prices may be supported, as OPEC members are likely to discuss production cuts at its October meeting, and as Europe would face an energy crisis due to uncertainty on oil and gas supply from Russia, according to CMC's Li.