Oil prices closed largely unchanged on Friday, but incurred a weekly loss on the strength of the dollar and fears that the economic slowdown will weaken demand for crude.
Brent crude futures settled at $96.72 a barrel, up just 13 cents. US West Texas Intermediate crude futures also rose 27 cents, to settle at $90.77. Both contracts fell about 1.5% by the end of the week.
Oil prices jumped for a brief period in volatile trading, on the back of statements made by the Federal Reserve Chairman in Richmond, Thomas Barkin, that the board will balance the pace of raising interest rates and the state of uncertainty about the impact of these increases on the economy. But crude pared its gains as investor concerns about upcoming interest rate hikes re-emerged.
The dollar index reached its highest level in five weeks, which also limited the gains of crude; Because a stronger dollar makes oil more expensive for buyers who use other currencies.
In a sign that the oil supply bottleneck is easing, the gap between the spot price of Brent and the second nearest expiry month for futures contracts is nearly $5 smaller than at the end of July.
Haitham al-Ghais, the new Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), told Archyde.com he was optimistic about oil demand next year.
He added before a meeting to be held on the fifth of September that OPEC is keen to ensure that Russia remains within the OPEC + alliance.
And supplies may shrink again when European buyers start looking for alternative supplies of Russian oil before EU sanctions take effect on December 5th.