By Shadia Nasralla
Brent crude futures were up $1.29, or 1.5%, to trade at $86.63 a barrel at 1024 GMT.
U.S. West Texas Intermediate (WTI) crude futures were up $1.56, or 2%, at $79.50 a barrel. There was no WTI settlement on Thursday due to the U.S. Thanksgiving holiday and trading volumes remained low.
Both contracts were still headed for their third consecutive weekly decline after hitting 10-month lows this week.
Brent’s market structure implies current demand is soft, with backwardation, defined by front-month prices trading above contracts for later delivery, having weakened in recent sessions .
For the two-month spread , Brent’s structure even briefly dipped into contango this week, implying oversupply with near-term delivery contracts below later deliveries.
China, the world’s top oil importer, on Friday reported a new daily record for COVID-19 infections, as cities across the country continued to enforce mobility measures and other curbs to control outbreaks.
This is starting to hit fuel demand, with traffic drifting down and implied oil demand around 1 million barrels per day lower than average, an ANZ note showed.
Meanwhile, G7 and European Union diplomats have been discussing a Russian oil price cap between $65 and $70 a barrel, but an agreement has still not been reached.
The aim is to limit revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets, but the proposed level is broadly in line with what Asian buyers are already paying.
Trading is expected to remain cautious ahead of an agreement on the price cap, due to come into effect on Dec. 5 when an EU ban on Russian crude kicks off, and ahead of the next meeting of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, on Dec. 4.