By Sonali Paul
MELBOURNE (Reuters) – Oil prices fell in early trade on Friday on a stronger dollar, but were on track for a weekly gain on concerns about supply tightening with Europe’s pending cut-off of imports from Russia.
Brent crude futures came off 42 cents, or 0.4%, to $96.54 a barrel at 0043 GMT, after rising 1.3% in the previous session. U.S. West Texas Intermediate (WTI) crude futures were down 56 cents, or 0.6%, at $88.52 a barrel, paring about half the gains from the previous session.
Still, both benchmark oil contracts were on course for a weekly rise, with Brent heading for a gain of more than 3% and WTI more than 4%.
Friday’s declines came as the dollar index inched up to 110.57, making oil more expensive for buyers holding other currencies.
Analysts said the strong rebound in U.S. gross domestic product in the third quarter reported on Thursday highlighted the resilience of the world’s largest economy and oil consumer.
“From an oil market perspective – despite the high interest rates – that’s a direct driver into your demand outlook,” said Baden Moore, head of commodities research at National Australia Bank.
He said volatility in the market is likely to be on the upside, given that global inventories are low, European sanctions on Russian crude are set to take effect in December, and Chinese demand is picking up.
The widening premium for Brent over WTI is being stoked by signs of a rise in refinery runs in China, Europe’s hunger for crude ahead of the embargo on Russian oil, and pending supply cuts by the Organization of Petroleum Exporting Countries (OPEC) and allies, together called OPEC+.
“The market remains wary of the impending deadlines for European purchases of Russian crude before the sanctions kick in on 5 December,” ANZ Research analysts said in a note.
(Reporting by Sonali Paul in Melbourne; Editing by Kenneth Maxwell)
