Oil set for weekly gain on tighter supply before Powell speech

Dubai: Oil was on track for a weekly gain amid a tightening supply outlook, with investor attention turning to a key speech on the US economy later Friday by Federal Reserve Chair Jerome Powell.

West Texas Intermediate futures edged above $93 a barrel after closing 2.5 per cent lower in the previous session as traders digested hawkish headlines from Fed officials. Powell is expected to reiterate the resolve of the central bank to keep raising interest rates to rein in rampant inflation.

Crude rallied earlier this week after Saudi Arabia flagged potential cuts to OPEC+ output to stabilize a volatile market, a move supported by other cartel members including Iraq and Kuwait.

“We believe oil prices will trend higher towards year end,” said Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA. “Oil demand concerns seem excessive, in our view, and very high gas prices should support oil demand throughout the winter with gas-to-oil switching effects.”

Oil has lost almost a quarter of its value since June on escalating concerns over a global economic slowdown, but seems to have found a floor around $90 a barrel this month.

Powell is scheduled to speak at 10 a.m. Washington time, marking the highlight of the two-day Jackson Hole Symposium. Kansas City Fed President Esther George - who votes on monetary policy this year - said the Fed hasn’t yet raised interest rates to levels that are weighing on the economy and may have to take them above 4 per cent for a time.