Oil steadied today after a sharp fall in the previous session, but pricess remained on track for a weekly decline on fears of hefty interest rate increases that are expected to curb global economic growth and demand for fuel.
Brent crude futures were up 68 cents, or 0.8%, at $91.52 a barrel this afternoon but were down 1.5% over the week.
US West Texas Intermediate (WTI) crude futures gained 37 cents, or 0.4%, to $85.47, down 1.6% this week.
Both benchmarks are set for third consecutive weekly losses, hurt partly by a strong US dollar, which makes oil more expensive for buyers using other currencies. The dollar index held near last week's high above 110.
In the third quarter so far, both Brent and WTI are down about 20% for the worst quarterly percentage declines since the start of the Covid-19 pandemic in 2020.
Investors are bracing for an increase to US interest rates, with the market also rattled by the International Energy Agency's outlook for almost zero growth in oil demand in the fourth quarter owing to a weaker demand outlook in China.
"Both the IMF and World Bank warned that the global economy could tip into recession next year. This spells bad news for the demand side of the oil coin and comes a day after the IEA forecast (on) oil demand," said PVM analyst Stephen Brennock.
"Recession fears coupled with higher U.S. interest rate expectations made for a potent bearish cocktail," he added.
Other analysts said sentiment suffered from comments by the US Department of Energy that it was unlikely to seek to refill the Strategic Petroleum Reserve until after the 2023 financial year.
On the supply side, the market has found some support on dwindling expectations of a return of Iranian crude as Western officials play down prospects of reviving a nuclear accord with Tehran.
Oil prices could also be supported in the fourth quarter by possible OPEC+ production cuts, which will be under discussion at the group's October meeting, while Europe faces an energy crisis driven by uncertainty on oil and gas supply from Russia.
Germany today took control of the PCK Schwedt oil refinery, majority owned by Russia's Rosneft in an effort to remove Russian oil in its energy system.