Oil futures: Crude rebounds despite Fed's Powell rate-hike hint

Quantum Commodity Intelligence – Oil futures ended the session higher following a hectic close to the week, coming after Federal Reserve Chair Jerome Powell said the US may need to raise interest rates further to ensure inflation is contained. 

Front-month Oct23 ICE Brent futures were trading at $84.62/b (1650 GMT), compared to the day's range of $$82.67-$84.74/b and Thursday's settle of $83.36/b.

At the same time Oct23 NYMEX WTI was trading $79.99/b, versus Thursday's settle of $79.05/b, as both benchmarks headed for a second week of losses.

Last Friday front-month Brent closed at $84.80/b, while WTI settled at $81.66/b.

Powell said Fed policymakers would proceed carefully as they "decide whether to tighten further," but added the central bank has not yet concluded if its benchmark interest rate is high enough to meet the US 2% inflation target.

The comments came at the Jackson Hole Symposium, with Powell's speech grabbing the headlines with respect to the prospect of another increase during for current the rate-hiking cycle when the FOMC meets next month.

This week's poor economic data from of Germany and France has also shined a spotlight on the EU, with the European Central Bank's chief Christine Lagarde also due to speak later Friday.  

Prices had been higher for much of the early session amid growing expectations that Saudi Arabia would at least in part extend its additional production cut for at another month, while Russia could also curb export volumes. 

"Oil prices are likely to remain under pressure next week if the survey-based production estimates indicate that Iranian supply is continuing to rise. This could then prompt Saudi Arabia to stick with its voluntary production cut in October," said Carsten Fritsch of Commerzbank.

Saudi Arabia announced an additional voluntary cut of 1 million bpd from July, which has since been extended into August and September, taking its output down to around 9 million bpd.

Russia, which now largely supplies India and China following sanctions, has also pledged to reduce exports by an extra 500,000 bpd in August and 300,000 bpd in September.

Commerzbank added the prospect of a significant tightening of supplies had caused Brent to rally by a around $15/b in July, although noted benchmarks had now shed a 'good third' of its gains, in part due to increased output from Venezuela, Iran and Iraq.