Oil gains 1% as investors await Fed’s Powell speech

London — Oil prices jumped more than 1% on Friday as the dollar firmed ahead of an eagerly awaited speech by the head of the U.S. Federal Reserve for hints on the outlook for interest rates.

Brent crude rose 98 cents, or about 1.2%, to $84.34 a barrel by 1315 GMT. U.S. West Texas Intermediate crude was up 92 cents, also roughly 1.2%, at $79.97.

Both benchmarks rose by more than $1 earlier in the session.

Investor caution ahead of Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium lifted the safe-haven dollar to a 10-week high with its biggest rise in a month as markets waited for word on how long interest rates would remain elevated.

A strong dollar makes oil more expensive for holders of other currencies, denting demand.

Meanwhile, inventory draws have recently come through in convincing fashion, Morgan Stanley analysts wrote in a note.

The bank expects Brent crude prices to be well supported around $80 per barrel, with crude likely to remain in deficit over the rest of this year before returning to a small surplus in early 2024.

However, the likelihood of crude deficits is no foregone conclusion, said John Evans of oil broker PVM.

Talks between Turkey and Iraq’s semi-autonomous Kurdistan regional government on northern Iraqi crude oil exports are set to continue after officials failed to reach agreement this week on a resumption of exports.

Turkey stopped Iraqi oil flows via Ceyhan port on March 25 after losing a long-standing arbitration case brought by Iraq.

Iran’s oil minister, meanwhile, has been quoted by state media as saying he expects the country’s crude oil output to hit 3.4 million barrels per day (bpd) by the end of September, even though U.S. sanctions remain in place.

Elsewhere, U.S. officials aredrafting a proposal that would ease sanctions on Venezuela’s oil sector, paving the way for more companies and countries to import its crude oil.

Norway’s Equinor on Friday said it started production at its extended Statfjord Ost field six months ahead of schedule.

“The support to oil prices from previous production cuts has ebbed,” Haitong Futures analysts said.

Several analysts expect Saudi Arabia to extend its voluntary oil production cut of 1 million bpd for a third consecutive month into October.