Oil steady as focus turns to US economic data

Representative image. Credit: Reuters File Photo

Oil prices steadied on Friday ahead of key US economic data after rising over 1 per cent in the last session on cuts to OPEC+ production targets.

Brent crude futures slipped 11 cents to $94.31 a barrel by 0339 GMT. WTI crude futures were down 5 cents to $88.40 a barrel, after earlier hitting $89.37 per barrel, the highest since September 14.

A stronger dollar added pressure on oil prices amid a chorus of hawkish Federal Reserve speakers signaling further aggressive central bank policy tightening.

Also Read — How will OPEC+ cuts affect oil prices, inflation?

Fed officials showed no intention of backing down from the most aggressive rate hike campaign in decades, with Fed Governor Lisa Cook, Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari all stressing that the inflation fight was ongoing and they were not prepared to change course.

Markets are keenly watching the US nonfarm payrolls report due later on Friday, with economists forecasting 250,000 jobs to have been added last month, compared with 315,000 in August.

"Oil is leaking lower in Asia, which is not so unusual after a big run-up heading into the weekend, especially against rising US yields and a stronger dollar providing the downdraft and triggering some pre-weekend and pre-nonfarm payroll profit-taking," Stephen Innes, managing partner at SPI Asset Management said in a note.

However, both benchmarks were headed for weekly gains, fuelled by production cut announcement by OPEC+.

The cut from the Organization of Petroleum Exporting Countries and allies including Russia, together known as OPEC+, is the largest reduction since 2020 and comes ahead of a European Union embargo on Russian oil. The decision would squeeze supplies in an already tight market, adding to inflation.

"Market sentiment was already bearish in anticipation of a weakening global economy, and this decision should further tighten the market," analysts at ANZ Research said in a note.

Tightening monetary policy and China's ongoing Covid-related movement restrictions mean global demand growth is expected to come under pressure, ANZ added.

US President Joe Biden expressed disappointment on Thursday over OPEC+'s plans and he and officials said the United States was looking at all possible alternatives to keep prices from rising.

Some of those options include releasing more oil from the Strategic Petroleum Reserve or exploring a curb on energy exports by US companies.