Oil rises on expectations of a smaller US interest rate hike

Oil prices rose on Friday on expectations of a milder US interest rate hike, but concerns about a recovery in demand capped gains.

By 0300 GMT, Brent crude futures for September delivery rose $1.25, or 1.3 percent, to $100.35 a barrel. West Texas Intermediate crude futures rose 90 cents, or 0.9 percent, to $96.68 a barrel.

The Federal Reserve’s more hawkish monetary policymakers said on Thursday they were leaning toward another 75 basis point rate hike at the Fed’s monetary policy meeting this month, not as much as traders were quick to prepare for after it showed Wednesday’s report that inflation is accelerating.

Uncertainty related to interest rate hikes and weak economic data pushed both contracts lower on Thursday and fell below their closing level on Feb. 23, the day before Russia invaded Ukraine.

However, both crudes made up for their losses by the end of the session.

US President Joe Biden will visit Saudi Arabia on Friday, where he will attend a summit of Gulf allies and invite them to pump more oil.

But spare capacity in members of the Organization of the Petroleum Exporting Countries (OPEC) is running low, with most producers pumping at full capacity, and it is unclear how much more Saudi Arabia can quickly pump into the market.