Oil prices were stable on Friday as support from a large cut to the OPEC+ supply target and a weaker dollar were countered by global recession fears and weak oil demand in China.
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Brent crude futures were down 31 cents, or 0.3%, at $94.26 a barrel at 0924 GMT while U.S. West Texas Intermediate (WTI) crude futures fell 25 cents, or 0.3%, to $88.86.
The Brent and WTI contracts both oscillated between positive and negative territority on Friday but were down about 4% over the week after two weeks of gains on concern over the global economy.
The U.S. dollar this week dropped from recent highs, making dollar-denominated commodities cheaper for holders of other currencies.
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China, the world’s largest crude oil importer, has been fighting COVID flare-ups after a week-long holiday ahead of a Communist Party Congress where President Xi Jinping is expected to extend his leadership.
The country’s infection tally is small by global standards, but it adheres to a zero-COVID policy that is weighing heavily on economic activity.
The International Energy Agency (IEA) on Thursday cut its oil demand forecast for this and next, warning of a potential global recession.
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On the bullish side, the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, last week announced a 2 million barrel per day (bpd) cut to oil production targets.
Underproduction among the group means this will probably translate to a 1 million bpd cut, the IEA estimates.
“The prospect of a decrease of around 1 million bpd from next month onwards will sharply reduce a previously expected build in critically low oil inventories over the coming months,” said PVM analyst Stephen Brennock.
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Saudi Arabia and the United States, meanwhile, have clashed over the decision.
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Oil prices were also supported by a steep drawdown in U.S. distillate stocks, though there has been a larger than expected surge in U.S. crude oil in storage.
