By Sonali Paul
MELBOURNE (Reuters) – Oil rose in early trading on Friday, paring some of the week’s losses that were driven by concerns over Chinese demand and expectations that a high price cap expected by Group of Sept (G7) on Russian oil will keep supply flowing.
Brent crude futures rose 13 cents, or 0.2%, to trade at $85.47 a barrel at 0121 GMT.
U.S. West Texas Intermediate (WTI) crude futures jumped 35 cents, or 0.5%, from nearly $78.32 a barrel on Wednesday. There was no WTI settlement on Thursday due to the Thanksgiving holiday in the United States.
Both contracts were heading for their third consecutive weekly decline, on track to fall around 2% on concerns about a loosening of supply.
G7 and European Union diplomats discussed capping Russian oil prices at $65-$70 a barrel, in a bid to limit revenue to fund Moscow’s military offensive in Ukraine without disrupting markets world oil companies.
“The market views (the price caps) as too high, which reduces the risk of retaliation from Moscow,” analysts at ANZ Research said in a note to clients.
Russian President Vladimir Putin has said Moscow will not supply oil and gas to countries that join in the imposition of the price cap, which the Kremlin reiterated on Thursday.
ANZ also said there were signs that a rise in COVID-19 cases in China, the world’s biggest oil importer, was starting to hit fuel demand, with traffic falling and implied demand for oil d about 13 million barrels per day, or 1 million bpd less. than average.
“This remains a headwind for oil demand which, combined with the weak US dollar, creates a negative backdrop for oil prices,” ANZ said in a separate commodity note.
Trade is expected to remain cautious ahead of a price cap deal, due to come into force on Dec. 5 when an EU ban on Russian crude begins, and ahead of the next meeting of the Organization of the Petroleum Exporting Countries. and its allies. , known as OPEC+, on December 4.
In October, OPEC+ agreed to cut its production target by 2 million barrels per day until 2023, and Saudi Energy Minister Prince Abdulaziz bin Salman reportedly said this week that OPEC+ was ready to further reduce production if necessary.
(Reporting by Sonali Paul in Melbourne; Editing by Edwina Gibbs)
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