Investing.com -- Oil prices rose Friday, on course to register weekly gains as traders focused on tight supplies rather than the uncertain macroeconomic outlook.
By 10:00 ET (14.00 GMT), the U.S. crude futures traded 0.3% higher at $87.15 a barrel, while the Brent contract climbed 0.4% to $90.31.
Both contracts are on course for gains of over 2% this week, having hit 10-month highs earlier in the week.
Tight supplies, U.S. inventories draw support market
The news earlier in the week that major producers Saudi Arabia and Russia will extend their previously-announced production cuts until the end of the year boosted the market given the prospect of tighter supplies.
Saudi Arabia will maintain its 1 million barrel per day production cut until end-2023, while Russia will also maintain its 300,000 barrel export reduction until the end of the year.
Adding to the positivity was the release of data showing that U.S. inventories shrank more than expected in the week to September 1.
“U.S. commercial crude oil inventories fell by 6.31MMbbls over the last week, leaving inventories at a little under 417MMbbls - the lowest level since December,” said analysts at ING, in a note. “The larger draw was driven by strong crude oil exports.”
Chinese oil imports help tone
Traders have also had time to digest the latest Chinese trade data, which provided some hopeful signs.
“It shows that crude oil imports over August averaged 12.48MMbbls/d, up 21% MoM and 31% higher than year-ago levels. While we have seen stock-building over large parts of the year, refiners have also been operating at higher rates, due to stronger domestic demand as well as increased exports,” ING added.
Global economic slowdown limits gains
However, gains are limited Friday as investors also have to contend with fears of an economic slowdown in a number of major consumers.
The economic recovery in China, the world’s largest crude importer, remains very patchy. Japan cut its second-quarter gross domestic product reading on Friday, casting doubts over whether an ultra-dovish Bank of Japan could keep fueling economic growth. And the German economy, the largest in the eurozone, is expected to contract by 0.4% in 2023, according to the DIW economic research institute Friday.
Even in the U.S., where economic data has generally been stronger than expected of late, there is the risk of the Federal Reserve tightening monetary policy further to stamp down on inflation.
Additionally, oil prices have to cope with the pressure from a stronger dollar, as the greenback hit a near six-month high on Thursday, making the commodity more expensive for foreign buyers.
Friday’s session ends with the release of the Baker Hughes oil rig count as well as CFTC positioning data.
(Ambar Warrick contributed to this item.)