Investing.com -- Oil prices rose Thursday, rebounding to a degree from weakness during the week, ahead of an eagerly awaited speech by Fed head Jerome Powell for hints on the outlook for interest rates.
By 09:10 ET (13:10 GMT), the U.S. crude futures traded 1.2% higher at $80.01 a barrel, while the Brent contract climbed 1.2% to $84.34.
Yet, despite these gains, both benchmarks are still on course for losses of around 1% this week, a second consecutive weekly decline.
Powell’s speech looms large
Traders have appeared to have attempted to square positions, after hefty losses during the week, ahead of a speech from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium later Friday.
Powell is expected to shed more light on the central bank’s plans for interest rates in the remainder of the year.
The prospect of higher U.S. interest rates has weighed on the crude market as tighter monetary policy is seen as likely to dent economic activity further, potentially hitting demand for crude.
Data released earlier this week showed that business activity in the U.S. and eurozone remained weak through August, as both major economies grappled with high interest rates and sticky inflation.
Strong dollar weighed on crude
Fears that Powell could offer hawkish signals had boosted the dollar to its highest level since early June earlier this week, hurting the oil market as it makes commodities denominated in dollars, like crude, more expensive for international buyers.
However, the greenback slipped back slightly on Friday, easing the pressure on the crude benchmarks.
Crude market to remain in deficit this year - Morgan Stanley (NYSE:MS)
Prolonged concerns over slowing Chinese demand have also contributed to weaker markets over the last couple of weeks, but losses have also been limited by the decisions of Saudi Arabia and Russia to cut production levels, tightening supply.
“We expect the crude market to remain in deficit in 2H23. However, oil demand likely slows in 2024 and can probably be fully met by non-OPEC supply additions,” according to analysts at Morgan Stanley, in a note.
“This suggests limited room for additional OPEC oil next year, but our base case indeed calls for only limited OPEC growth. Altogether, this points to a return to modest oversupply in early 2024,” Morgan Stanley added.
(Ambar Warrick contributed to this item.)