Brent crude futures rose 0.6%, or 48 cents, to $76.32 a barrel by 0406 GMT, while U.S. West Texas Intermediate crude futures were at $71.61 a barrel, up 0.5%, or 38 cents.

Both contracts jumped more than 2% on Friday but fell for the seventh straight week, their longest streak of weekly declines since 2018, on lingering oversupply concerns.

The recent price weakness drew demand from the U.S., which has sought up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) for delivery in March 2024.

“We know the Biden Administration is in the market looking to refill the SPR, which will provide support,” IG analyst Tony Sycamore said in a note, adding that prices were also being supported by technical chart indicators.

Despite the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, having pledged to cut 2.2 million barrels per day (bpd) of production in the first quarter, investors remain sceptical supply will drop. Output growth in non-OPEC countries is seen leading to excess supply next year.

RBC Capital Markets expects stock draws of 700,000 bpd in the first half but only 140,000 bpd for the full year.

“Prices will remain volatile and directionless until the market sees clear data points pertaining to the voluntary output cuts,” RBC analysts said in a note.

With cuts not implemented until next month and country level production data to follow subsequent to January, it will be a volatile two months before there is preliminary clarity on quantifiable data on compliance, the analysts added.

The latest consumer price index data from China, the world’s top oil importer, showed rising deflationary pressures as weak domestic demand cast doubt over the country’s economic recovery.

Chinese officials pledged on Friday they would spur domestic demand and consolidate and enhance the economic recovery in 2024.

This week, investors are watching for guidance on interest rate policies from meetings at five central banks, including the Federal Reserve, and data on U.S. inflation, for their impact on the global economy and oil demand.

December Brent crude futures , set to expire on Tuesday, rose 36 cents, or 0.41%, to stand at $87.81 a barrel by 0305 GMT. The more heavily traded January Brent crude futures climbed 29 cents, or 0.34%，to $86.64 a barrel.

U.S. West Texas Intermediate crude increased 34 cents, or 0.41%, to $82.65 a barrel.

Oil fell more than 3% on Monday as investors grew cautious ahead of Wednesday’s U.S. Federal Reserve meeting, despite an escalation of Israel’s attacks on Gaza.

“Although it implemented a ground attack, it also retreated very quickly and Iran is currently only resorting to verbal deterrence,” said CMC Markets’ analyst Leon Li, who is based in the Chinese commercial hub of Shanghai.

“If this evolves into a full-scale invasion and there is involvement from Iran, tighter supply worries could resurface.”

Prices had rebounded on a technical correction earlier on Tuesday and market upside now hangs on whether Israel expands its ground offensive, he added.

In a note, ING analysts said, “Disruptions to Iranian oil flows remain the most obvious risk to the market.”

Such lost supply could range between 500,000 barrels per day (bpd) and 1 million bpd if the United States strictly enforces sanctions once again, they added, although Middle East developments had yet to affect oil supply.

Weaker-than-expected manufacturing and non-manufacturing activity data from China stoked fears of slowing fuel demand from the world’s No. 2 oil consumer.

Its official purchasing managers’ index missed a forecast and dipped back below the 50-point level separating contraction from expansion.

Prices gained some support from concern over prospects for crude exports from Venezuela, riven by election uncertainty.

The Supreme Court’s suspension of the results of this month’s opposition presidential primary is likely to call into question whether the United States will keep up its relief from sanctions for Venezuela, the ING analysts said.

The U.S. had recently decided to ease sanctions in return for the promise of fairer elections in 2024, they added.

Markets were also keeping a close eye on the U.S. central bank meeting, which affects domestic fuel demand, despite a high likelihood of interest rates keeping steady, according to a poll by CME’s Fedwatch tool.

The view from the Organization of the Petroleum Exporting Countries, in its 2023 World Oil Outlook released on Monday, contrasts with that of other forecasters, including the International Energy Agency (IEA), that say demand might peak this decade.

Another decade or more of rising consumption would be a boost for OPEC, whose 13 members depend on oil income. The group says oil should be part of the energy transition, and it cited decisions by some governments and companies to slow their retreat from fossil fuels.

“Recent developments have led the OPEC team to reassess just what each energy can deliver, with a focus on pragmatic and realistic options and solutions,” OPEC Secretary General Haitham Al Ghais wrote in the foreword to the report.

“Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos,” he added, putting the required oil sector investment at $14 trillion out to 2045, up from $12.1 trillion estimated last year.

OPEC expects world oil demand to reach 116 million barrels a day (bpd) by 2045, around 6 million bpd higher than expected in last year’s report, with growth led by China, India, other Asian nations, and Africa and the Middle East.

IEA Executive Director Fatih Birol said last week global coal, oil and natural gas consumption may peak before 2030. The IEA advises industrialised countries and in 2021 said investors should halt new oil investments if the world wants to reach net zero emissions by mid-century.

Net Zero Pushback

Speaking at the publication’s launch in Riyadh, the capital of top OPEC producer Saudi Arabia, OPEC’s Al Ghais cited pushback against net zero policies, and said climate action should not come at the cost of global energy security.

“Over the past year what is clear is that we have seen populations voice concerns about the costs and actual benefits of net zero targets,” he said.

“There are some who unfortunately continue to push the extremely risky narrative of dismissing oil with talk of oil demand dropping by almost 25 million barrels a day by the year 2030,” he added.

In the report, OPEC also raised its demand forecasts for the medium term to 2028, citing robust demand this year despite economic headwinds such as interest rate hikes.

World demand in 2028 will reach 110.2 million bpd, OPEC said, up from 102 million bpd in 2023. It predicted oil use in 2027 would reach 109 million bpd, up from 106.9 million bpd estimated in 2022.

In 2020, OPEC made a shift when the pandemic hit oil demand, saying consumption would eventually slow after years of predicting ever-increasing use. After that it started raising forecasts again as oil use recovered.

While the 2022 version of OPEC’s report anticipated global demand reaching a plateau after 2035, the latest sees oil use rising by another 1.6 million bpd in the last 10 years of the forecast period. OPEC now expects demand to be higher than it thought in 2019, before the pandemic.

By 2045, there will be 2.6 billion vehicles on the world’s roads, a billion more than in 2022, OPEC forecast. Over 72% of them will be powered by a combustion engine despite electric vehicles being the fastest-growing segment, the report said.

OPEC and its allies, known as OPEC+, are again cutting supply to support crude prices. The report sees OPEC’s total share of the oil market rising to 40% in 2045 from 34% in 2022 as non-OPEC output starts declining from the early 2030s.

The outright price of Nigerian crude Qua Iboe surpassed $100 a barrel on Monday, according to LSEG data . Malaysian crude Tapis reached $101.30 last week, said Bjarne Schieldrop, analyst at Swedish bank SEB, in a report.

Oil has risen to its highest level of 2023 as investors are focused on the prospect of a supply deficit in the fourth quarter after Saudi Arabia and Russia extended supply cuts. The two are the biggest producers in the OPEC+ group, most other members of which are also curbing output.

“The overall situation is that Saudi Arabia and Russia are in solid control of the oil market,” Schieldrop said.

Brent oil futures, a global benchmark , traded as high as $94.89 on Monday and the related benchmark used for trading much of the world’s physical cargoes, called dated Brent , stood just above $96 according to LSEG.

Qua Iboe, and some other crudes priced against Brent, are above $100 already because they are based on the price of dated Brent plus a cash differential or premium, currently assessed by LSEG at around $4.25 a barrel .

Schieldrop said dated Brent is highly likely to move above $100 as “only noise is needed to bring it above.” Swiss bank UBS sees Brent futures reaching triple digits.

“We expect Brent to trade in a range of $90–100 over the coming months, with a year-end target of $95,” said UBS analyst Giovanni Staunovo.

Brent crude futures were up by 10 cents to $90.14 a barrel at 1346 GMT. U.S. West Texas Intermediate crude (WTI) futures traded at $86.92 a barrel, up 23 cents.

Against a basket of currencies, the dollar was at 104.68, not far off the six-month high of 104.90 touched overnight. A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies.

“The reason the market gave back half of the gains and is listless this morning is because within the language of the joint announcement there is a caveat that these cuts will be reviewed on a monthly basis,” said John Evans of oil broker PVM.

“This flexibility add-in allows for wiggle room, but the market smells a taper,” he said, citing conditions like anti-inflation battles in the U.S. and other countries, whether crude prices near $100 a barrel, or the effect on Saudi oil revenues.

Reflecting near-term supply concerns, front-month Brent futures had traded on Wednesday near 9-month highs at $4.13 a barrel above prices in six months. U.S. WTI futures’ equivalent spread was as much as $4.88 a barrel, also hovering near nine-month highs.

Saudi Arabia and Russia on Tuesday extended their voluntary oil cuts to the end of the year, the former to the tune of 1 million barrels per day (bpd) and the latter by 300,000 bpd. These are on top of the April cut agreed by several OPEC+ producers running to the end of 2024.

Both countries will review their decisions monthly to consider deepening cuts or raising output depending on market conditions.

However, analysts warned that price rises could meet with obstacles as demand may dip when U.S. refineries enter their September-October maintenance period, while potentially higher supply from Iran, Venezuela and Libya could also weigh.

Research company IIR Energy said on Wednesday it expects U.S. oil refiners to increase available refining capacity by 274,000 bpd for the week ending Sept. 8.

Brent crude futures for October, expiring on Thursday, rose 45 cents, or 0.5%, to $86.31 a barrel by 1004 GMT. The more active November contract was up 25 cents, or 0.3%, at $85.49.

U.S. West Texas Intermediate crude futures for October rose 29 cents, or 0.4%, to $81.29.

U.S. government data on Wednesday showed the country’s crude inventories (USOILC=ECI) fell by a larger than expected 10.6 million barrels last week, depleted by high exports and refinery runs.

Meanwhile, analysts expect Saudi Arabia to extend a voluntary oil production cut of 1 million barrels per day (bpd) into October, adding to cuts put in place by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a combination known as OPEC+.

“With Brent prices having stalled in the mid-$80s … the prospect of those Saudi barrels returning to the market any time soon looks slim and the impact is increasingly being felt across the world as commercial stock levels of crude and fuel products continue to drop,” said Saxo Bank analyst Ole Hansen.

Weak Chinese factory data weighed on prices, however.

China’s manufacturing activity shrank again in August, an official factory survey showed on Thursday, fuelling concerns about weakness in the world’s second-biggest economy.

The official purchasing managers’ index (PMI) rose to 49.7 from 49.3 in July, the National Bureau of Statistics said, but it remained below the 50-point level. A reading above 50 points represents expansion from the previous month.

Investors are also awaiting inflation numbers as measured by U.S. personal consumption expenditures (PCE), which will be released on Thursday and is the U.S. Federal Reserve’s preferred gauge of inflation.

Meanwhile, the U.S. government revised down its gross domestic product (GDP) growth to 2.1% in the past quarter, from the 2.4% pace reported last month, and data released on Wednesday showed private payroll growth slowed significantly in August.

The Fed can end its cycle of increases to interest rates if the labour market and economic growth continue to slow at the current gradual pace, the former president of the Boston Fed said on Wednesday.

Indian Oil Corp (IOC.NS) made payment to Abu Dhabi National Oil Company (ADNOC), according to a statement issued by Indian embassy in UAE.

The transaction comes after one involving the sale of 25 kg gold from a UAE gold exporter to a buyer in India at about 128.4 million rupees ($1.54 million).

India in July signed an agreement with the UAE allowing it to settle trade in rupees instead of dollars, boosting India’s efforts to cut transaction costs by eliminating dollar conversions.

During a visit by Indian Prime Minister Narendra Modi to the UAE, the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.

Bilateral trade between India and UAE was $84.5 billion in 2022/23.

India is keen to push similar local currency arrangements with other countries, as it looks to boost exports amid slowing global trade.

India, the world’s third biggest oil importer and consumer, ships in over 80% of its oil needs from overseas.

“Government has been taking up the issue, bilaterally, with crude oil producing countries, with OPEC and with heads of other international fora to convey India’s serious concerns over crude oil price volatility,” Puri said in a written reply submitted to parliament.

India wants responsible and reasonable pricing for consumer countries, he said, without elaborating.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, began limiting supplies in late 2022 to bolster the market and in June extended supply curbs into 2024.

Saudi Arabia and Russia earlier this month made additional pledges outside the OPEC+ agreement to support crude prices.

Tighter supply has underpinned a rally in oil prices, with Brent crude trading close to its January highs on Thursday. Brent crude was down 23 cents to $87.32 a barrel at 1251 GMT, while West Texas Intermediate crude (WTI) was down 37 cents at $84.03.

In India, high oil prices have hit the profitability of the government- controlled retailers that have not revised the pump prices of petrol and diesel since last year to shield customers and rein in inflation.

India’s three state-run refiner and fuel retailers – Indian Oil Corp (IOC.NS), Bharat Petroleum Corp (BPCL.NS) and Hindustan Petroleum Corp (HPCL.NS) – dominate fuel retailing in India.

Saudi Arabia’s cabinet said on Tuesday that it reaffirms its support for precautionary measures by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to stabilise the market, state media reported.

Brent crude futures rose 22 cents, or 0.3%, to $86.39 a barrel by 0806 GMT. U.S. West Texas Intermediate (WTI) crude gained 19 cents, or 0.2%, to $83.11. Both contracts gained nearly $1 the previous day.

Crude posted its sixth consecutive weekly gains last week and hit its highest levels since mid-April on Monday, helped by a reduction in OPEC+ supplies and hopes of stimulus boosting oil demand recovery in China.

“There is no doubt that there is plenty of momentum here,” said Naeem Aslam, chief investment officer at Avatrade. “The clear trend seems to be skewed to the upside.”

Some bearish pressure came from American Petroleum Institute (API) figures on Tuesday, which according to market sources showed U.S. crude stocks rose by 4.1 million barrels last week, although gasoline and distillate inventories fell.

“Prices remain stable this morning despite economic headwinds helped by U.S. product draws reported by the API, albeit crude inventories built more than expected,” oil broker PVM said.

Official U.S. Energy Information Administration inventory figures are out at 1430 GMT.

On Tuesday, oil came under pressure from Chinese data showing crude oil imports in July fell 18.8% from the previous month to their lowest daily rate since January, although they were up 17% from a year earlier.

But adding support, Saudi Arabia last week extended its voluntary production cut of 1 million barrels per day to the end of September and Russia said it would cut oil exports by 300,000 bpd in September.

Brent crude futures for October rose 2 cents to $85.16 a barrel by 0609 GMT, while U.S. West Texas Intermediate crude for September rose 9 cents, or 0.1%, to $81.64.

Both benchmarks were on track for a sixth week of gains, their longest streak of weekly gains this year. Brent has risen 15.4% and WTI by 18.2% during the last six weeks.

Saudi Arabia on Thursday extended a voluntary oil production cut of 1 million barrels per day (bpd) to the end of September. Russia will also slash its oil exports by 300,000 bpd in September, its Deputy Prime Minister Alexander Novak said.

The Joint Ministerial Monitoring Committee of OPEC+ is unlikely to tweak its overall oil output cuts at its meeting on Friday, sources have said. But the extension of Saudi Arabia’s reductions and comments by Russia ahead of the OPEC+ meeting have raised supply concerns, supporting prices.

However, the latest batch of U.S. data showing tight labor markets and a slowing service sector has triggered some worries that an economic slowdown would curb demand for oil and pressure prices lower, even with the supply cuts.

“A strong dollar has weighed on crude prices and everyone wants to know if a hot labor market will force the Fed to tighten policy even further,” said Edward Moya, an analyst at OANDA, referring to the U.S. Federal Reserve potentially raising interest rates.

Additionally, the downturn in euro zone business activity worsened more than initially thought in July and the Bank of England raised its interest rate to a 15-year peak on Thursday. Higher borrowing costs for businesses and consumers could slow economic growth and reduce oil demand.

However, an improved demand outlook and tighter supply could continue to buoy the oil markets, said Tina Teng, an analyst at CMC markets.

“The upcoming US non-farm payroll (data) will be in focus, and steer market sentiment tonight,” Teng said, referring to data on U.S. employment.