An aerial view of Phillips 66 oil refinery is seen in Linden, New Jersey.
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Oil prices were on track for their first weekly gain in five on Friday, underpinned by a weaker dollar and the possibility that OPEC+ will agree to cut crude output when it meets on Oct. 5.
Brent crude futures for November, which expire on Friday, fell 29 cents, or 0.3%, to $88.20 per barrel. The more active December contract was down 27 cents at $86.91.
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US West Texas Intermediate (WTI) crude futures declined 51 cents to trade at $80.72 per barrel.
Both contracts rose by more than $1 earlier in the session but pared gains on news that OPEC+ narrowed the amount by which it was considering cutting output to between 500,000 and 1 million barrels per day (bpd), OPEC+ sources told Reuters.
An OPEC source put the likely figure closer to 500,000 bpd. earlier this week, however, a source familiar with Russian thinking said Moscow could suggest a cut of up to 1 million bpd at the group’s Oct. 5 meetings.
“A deteriorating crude demand outlook won’t allow oil to rally until energy traders are confident that OPEC+ will slash output at the October 5th meeting,” senior OANDA analyst Edward Moya said in a client note.
Analysts expect a production cut because demand fears linked to a possible global economic slowdown and rising interest rates have weighed on crude prices.
Brent and WTI prices are likely to finish the third quarter with a chunky 23% decline.
“Expect oil prices to receive a supportive kick up the backside next week,” said Stephen Brennock of oil broker PVM, adding that the OPEC+ leadership will want to safeguard a price floor of $90 a barrel.
Brent and WTI are still poised for a weekly gain of about 3%. It would be the first weekly rise since August and follow nine-month lows hit earlier in the week.
Oil prices were shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity.
Analysts also expect buying to lift as Russia prepares to annex four Ukrainian regions to Russia on Friday in a move that could force Western nations to strengthen strengthen against Moscow.
European Union countries reached an initial agreement on what would be the bloc’s eighth round of sanctions against Russia for waging war against Ukraine, three diplomatic sources told Reuters on Friday.