Oil surges by 1% on supply cuts

Oil prices climbed about 1% on Friday, supported by supply cuts despite weak economic news from Germany, a stronger US dollar and the prospect of more US rate hikes.

Brent futures rose 96 cents, or 1.2%, to $84.32 a barrel by 1616 GMT. US West Texas Intermediate (WTI) crude rose 78 cents, or 1%, to $79.83. For the week, Brent was down about 1% and WTI down about 2%. Last week, both benchmarks fell 2%.

Limiting gains, economic news from Germany, Europe’s biggest economy, was weak and the US dollar rose to a five-month high against a basket of other currencies after Fed Chair Jerome Powell said further interest rate hikes may be needed to fight inflation.

Higher interest rates can slow economic growth and reduce oil demand. A stronger dollar can also slow demand by making oil more expensive for holders of other currencies.

“Supply cuts from OPEC+ continue to support the market but uncertainty over the global economic outlook...are weighing a little,” said Craig Erlam, senior market analyst at Oanda.