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Oil prices witnessed volatile performance on Friday, as hopes for further easing of Coronavirus restrictions in China and the subsequent recovery in demand in the world’s second-largest economy boosted market sentiment, but the rise of the dollar limited the gains.
Brent crude futures fell 1 cent, or 0.01%, to $86.87 a barrel by 0731 GMT, after earlier rising to $87.40.
US West Texas Intermediate crude futures fell 21 cents, or 0.3 percent, to $81.01 a barrel, after rising to $81.63 earlier in the session.
The two contracts are heading for their first weekly gains after three consecutive weeks of declines.
Sources told Reuters that China is preparing to announce an easing of COVID-19 quarantine rules in the coming days, as well as a reduction in mass testing, which would mark a major shift in the country’s policy after the world’s toughest restrictions, sparked widespread protests and public anger.
These expectations did not reflect positively on the oil market due to the rise of the dollar, whose performance is usually inversely proportional to oil prices. The dollar rose from its lowest level in 16 weeks against a basket of major currencies after data showed that consumer spending in the United States increased strongly in October.
Meanwhile, diplomats and a document seen by Reuters revealed that EU governments had agreed in principle to implement a cap on the price of Russian seaborne oil at $60 a barrel, with an adjustment mechanism to keep the price five percent below market level.
An EU diplomat said that all EU governments must agree in writing to the decision no later than Friday. So far Poland, which has sought to lower the price cap as much as possible, has not confirmed it will support the agreement.
