Oil prices fell 1.5% on the week on recession concerns

Oil prices held steady on Friday, but fell during the week on fears that a stronger US dollar and economic slowdown will weaken demand for crude.

Brent crude futures gained 13 cents to close at $96.72 a barrel. US West Texas Intermediate crude rose 27 cents to close at $90.77. Both benchmarks fell about 1.5% on a weekly basis. Oil briefly rose in choppy trading on comments from Richmond Federal Reserve President Thomas Barkin, who said the impulse to raise rates nL1N2ZV147 should be balanced by the impact of rate hikes on the economy. However, crude oil pared its gains as investors' concerns about upcoming rate hikes resettled. The strength in the US dollar reached a five-week high, which limited crude's gains as it made oil more expensive for buyers in other currencies. [USD/] "While the oil complex has been able to recover from a strong dollar in any given session, prolonged strong dollar trends will be a major headwind to sustainable oil price gains," Jim Ritterbusch of oil trading consultancy Ritterbusch and Associates said in a note. In a sign that the tightness in oil supplies is easing, the price gap between Brent and second-month futures has narrowed by about $5 a barrel since late July to less than $1. For WTI, the spread narrowed to a 39-cent premium from a premium of about $2 at the end of July. Haitham Al Ghais, the new secretary general of the Organization of the Petroleum Exporting Countries, told Reuters he was optimistic about oil demand until 2023. Ahead of a meeting on September 5, Al Ghais said OPEC was keen to ensure that Russia remained part of the OPEC+ group. Supplies could tighten again as European buyers look for alternative supplies to replace Russian oil ahead of European Union sanctions that take effect from December 5. "We calculate that the EU will need to replace 1.2 million barrels per day of Russian crude imports by sea with crude from other regions," consultancy FGE said in a note. Data released earlier this week showed US crude stockpiles fell sharply as the world's largest producer exported 5 million barrels of oil a day last week and oil companies found demand from European countries looking to substitute Russian crude. [EIA/S] However, the number of US oil rigs, an early indicator of future supply, was unchanged at 601 this week, while shale oil production in September is expected to reach the highest level since March 2020, according to Baker Hughes Co, as energy companies gradually increase production to pre-pandemic levels. [RIG/U] The US Commodity Futures Trading Commission (CFTC) announced that money managers reduced their net long US crude oil futures and options positions in New York and London by 18,389 contracts to 154,824 in the week to August 16.