Oil Futures Settle Modestly Higher

Oil futures settled modestly higher on Friday, recovering from early weakness, but posted a weekly loss due to concerns about outlook for energy demand amid fears of a possible recession in Europe.

With natural gas prices continuing to surge higher, posing upside risks to the inflation outlook and threatening to send the European economy into recession, oil prices slipped earlier in the day.

The dollar's rise amid expectations of more sharp interest rate hikes by the Federal Reserve in the coming months weighed as well on oil prices this week.

West Texas Intermediate Crude oil futures for September ended higher by $0.27 or about 0.3% at $90.77 a barrel, coming off a low of $88.38 a barrel.

Oil prices rebounded from early weakness today, after Richmond Federal Reserve President Thomas Barkin said today that the central bank officials have "a lot of time still" before they need to decide how large an interest rate increase to approve at their policy meeting in September.

Barkin added that the Fed is now balancing its rate hike parth with uncertainty over any impact on the economy.

Meanwhile, markets are pricing in a half percentage points ECB move in September and a 35% chance of a bigger 75-basis point move.

Recent data showing declines in U.S. crude and gasoline inventories last week contributed as well to the rebound in oil prices.

A report from Baker Hughes said U.S. energy firms cut the number of oil and natural gas rigs for a third week in a row.

The report said the oil and gas rig count in the U.S. fell by one to 762 this week. Oil rigs were unchanged at 601, while gas rigs fell one to 159.

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