Oil prices dipped on Friday in choppy trading but notched their first weekly gain in five on Friday, underpinned by the possibility that OPEC+ will agree to cut crude output when it meets on October 5.
Brent crude futures for November, which expire on Friday, fell 53 cents, or 0.6 per cent, to $87.96 a barrel. The more active December contract was down $2.07 at $85.11, Reuters reports.
US West Texas Intermediate (WTI) crude futures fell $1.74, or 2.1 per cent, to $79.49.
Both contracts rose by more than $1 during the session but dropped on news that OPEC's oil output rose in September to its highest since 2020, surpassing a pledged hike for the month, according to a Reuters survey on Friday.
"There is definitely some profit taking from the gains we saw earlier in the week. $80 is sort of the pivot point these days," said John Kilduff, partner at Again Capital LLC in New York.
"Increased worries about financial stability in the UK ... are undermining the demand outlook once again," Kilduff added.
Brent and WTI gained 2 per cent and 1 per cent on a weekly basis, marking the first weekly rise since August and following nine-month lows hit this week, Reuters adds.
Money managers cut their net long US crude futures and options positions in the week to September 27, the US Commodity Futures Trading Commission (CFTC) said.
While the dollar has dropped from 20-year highs earlier in the week, it gained through the day. A stronger greenback makes dollar-denominated oil more expensive for buyers holding other currencies, reducing demand for the commodity.
"Price swings have become the norm as market players juggle worries over the global economy and the prospect of tightening oil supplies," said Stephen Brennock of oil broker PVM.
The market has seen support from the prospect of the Organization of the Petroleum Exporting Countries (OPEC) and its allies considering cutting production quotas by between 5,00,000 and 1 million barrels per day (bpd) at their October 5 meeting.
"A deteriorating crude demand outlook won't allow oil to rally until energy traders are confident that OPEC+ will slash output," senior OANDA analyst Edward Moya said.
Analysts expect a production cut because demand fears linked to a possible global economic slowdown and rising interest rates have weighed on crude prices.
US energy firms this week added two oil rigs for a third week in a row, but growth in the third quarter slowed due to recession fears and nagging supply shortages.
Top White House officials are also set to meet with oil executives on Friday to discuss Hurricane Ian and low gasoline inventories as President Joe Biden warns the industry not to price-gouge consumers, according to two sources familiar with the matter.
Brent and WTI prices finished the third quarter with chunky 23 per cent and 25 per cent declines respectively.