The price of oil rose above $88 a barrel on Friday as traders cautiously returned to commodity markets following sharp sell-offs this week.
At midday benchmark crude for May delivery was up 30 cents to $88.30 a barrel on the New York Mercantile Exchange. On Thursday the Nymex contract for West Texas Intermediate rose $1.05 a barrel.
Crude has lost about $9 a barrel since the beginning of the month, as various reports highlighted slower growth in China and still-sluggish growth in the U.S. and elsewhere, while oil supplies remained high.
At the same time investors sold off gold, silver and other commodities, and looked to the stock market for better returns in the long run. The stock market had a volatile week as many of those investors bought and sold shares, looking to consolidate their positions.
Analysts said relatively low prices for oil and a weaker dollar rekindled interest among buyers.
"Crude oil prices rebounded and climbed higher on Friday ... supported by a weaker U.S. dollar and a strong rebound in the global equity markets and increased risk appetite," said a note from Sucden Financial Research in London. A weaker dollar makes crude cheaper — and a more attractive investment — for traders using other currencies.
Prices were also supported by the possibility that oil-producing countries could reduce output.
Some of the members of OPEC — which includes some the world's leading oil exporters like Saudi Arabia, Kuwait, Venezuela and Nigeria — have said that $100 a barrel is a "reasonable" price for both producers and consumers.
In London Brent crude, which is used to price oil used by many U.S. refiners, was up 28 cents at $99.41 on the ICE Futures exchange, below OPEC's ideal price.
"If the oil price were to fall further, this would step up the pressure on OPEC to take action," said a report from analysts at Commerzbank in Frankfurt. "At present, OPEC is producing (around) 800,000 barrels per day more crude oil than is needed given the growing shale oil production in the U.S. and the weaker than expected global oil demand."
Meanwhile many drivers in the U.S. are seeing lower prices at the pump. The national average for a gallon of regular fell about half a cent at $3.51 a gallon. That's about five cents lower than a week ago and almost 39 cents below a year ago.
In other energy futures trading on the Nymex:
— Gasoline rose 1 cent to $2.77 per gallon.
— Heating oil added 1 cent to $2.77 a gallon.
— Natural gas fell 2 cents to $4.38 per 1,000 cubic feet.
Pamela Sampson in Bangkok and Pablo Gorondi in Budapest contributed to this report.
- Commodity Markets
- Basic Materials Industry
- Crude oil prices
- New York Mercantile Exchange