Oil steadied as investors weighed the impact of sharp interest rate rises on energy consumption, offsetting hopes of higher Chinese demand and output cuts by OPEC and its allies.

To fight inflation, the US Federal Reserve is trying to slow the economy and will keep raising its short-term rate target, Federal Reserve Bank of Philadelphia President Patrick Harker said yesterday.

Brent crude was down two cents at $92.36 a barrel this afternoon, while US West Texas Intermediate crude was up by 35 cents, or 0.4%, to $84.86.

"With several key Fed members taking turns at the hawk's pulpit this week arguing for even higher interest rates, it blunted optimism from China's reduced quarantine hopes," Stephen Innes, managing director at SPI Asset Management, said in a note.

"Everyone is pining for a China-reopening-driven commodity boost, but we are not there yet," he added.

Brent, which came close to its all-time high of $147 a barrel in March, is on track for a weekly gain of almost 1%, while US crude was set to fall less than 1%. Both benchmarks dropped in the previous week.

Oil gained a lift yesterday after Bloomberg News reported that Beijing was considering cutting the quarantine period for visitors to seven days from 10 days. There has been no official confirmation from Beijing.

"The knee-jerk price action provided a useful glimpse of what to expect once more punitive restrictions are lifted," said Stephen Brennock of oil broker PVM, of the market's rally after the report.

China, the world's largest crude importer, has stuck to strict Covid-19 curbs this year, weighing heavily on business and economic activity and lowering demand for fuel.

Oil gained support from a looming European Union ban on Russian oil, as well as the output cut agreed earlier this month by the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+.