U.S. West Texas Intermediate (WTI) crude futures for September delivery rose $1.09, or 1.1%, to $97.51 a barrel at 0041 GMT, reversing the previous session on worries about the U.S. economy The dip when it was hit by a recession.
Brent crude for September settlement, which expires on Friday, rose 86 cents, or 0.8%, to $108.00 a barrel. The more active October contract rose 87 cents, or 0.9%, to $102.70.
Brent is on track to gain nearly 5% this week, its second straight weekly gain, while WTI is on track to gain nearly 3% this week, recovering the previous week’s losses.
“Amid a weak dollar and continued supply crunch, there is little chance of a (announced) slump in oil prices,” said Tina Teng, an analyst at CMC Markets.
Oil prices typically rise when the U.S. dollar weakens, as a weaker dollar makes crude cheaper for buyers holding other currencies.
The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, on Aug. 3 will be key as producers have now lifted a record 9.7 million barrels per day (bpd) of output cuts. Agreed in April 2020, when the COVID-19 pandemic hit demand.
OPEC+ sources said the group would consider keeping oil output unchanged in September, but two OPEC+ sources also told Reuters a modest increase would be discussed.
The decision not to raise output will disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month in hopes of reaching a deal on oil production.
The administration is optimistic about the OPEC+ meeting, a senior U.S. administration official said on Thursday, adding that additional supply would help stabilize markets.
However, analysts said it would be difficult for OPEC+ to significantly increase supply given that many producers are struggling to meet production quotas due to a lack of investment in oil fields.
“While supplies from Libya and Ecuador are stabilizing, OPEC production is constrained. Lack of investment in many member states will limit production,” said ANZ research analysts.