MELBOURNE: Oil prices were little changed in early trade on Friday but headed for their first weekly gain in five weeks, underpinned by a weaker U.S. dollar and the possibility that OPEC+ may agree to cut crude output when it meets on Oct. 5.
U.S. West Texas Intermediate (WTI) crude futures for November delivery rose 6 cents to $81.29 a barrel at 0054 GMT after falling 92 cents in the previous session.
Brent crude futures for November, which expire on Friday, inched up 2 cents to $88.51 a barrel, after losing 83 cents in the previous session. The more active December contract gained 1 cent to $87.19.
Both Brent and WTI are on track to rise by about 3% for the week, their first weekly rise since August, after hitting nine-month lows earlier in the week.
For all of September, Brent is set to drop by 8%, down for a fourth month. During the third quarter, Brent has plunged 23%, its first quarterly loss since the fourth quarter of 2021.
WTI is set to fall by 9% in September, also its fourth monthly decline, and it dropped by 23% during the quarter, the first quarterly slump since the period ending in March 2020 when COVID-19 slammed demand.
Analysts said the market appeared to have found a floor, with supply set to tighten as the European Union will ban Russian oil imports from Dec. 5. However, the key unknown is how much demand will drop as global growth slows in the face of aggressive interest rate hikes.
"Fundamentally, I still think prices are likely to move higher from here on tightening of Russian sanctions and with low global crude inventories, and the SPR (U.S. Strategic Petroleum Reserve) supplies falling off," said National Australia Bank commodities analyst Baden Moore.
"I expect OPEC is well positioned to manage supply to offset risks to demand," he said.
Leading members of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, have begun discussing an output cut ahead of their meeting on Wednesday, three sources told Reuters.
Russia could suggest a cut of up to 1 million barrels per day, a source familiar with Russian thinking said earlier this week.
Oil prices were also shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity. (Reporting by Sonali Paul in Melbourne; Editing by Christian Schmollinger)