Oil prices flat, set for dismal week on demand jitters

Investing.com-- Oil prices steadied in Asian trade on Friday after rebounding in the prior session amid some bargain buying, but were still headed for steep weekly losses amid persistent concerns over slowing demand. 

Continued negotiations over an Israel-Hamas ceasefire also saw traders attach a smaller risk premium to crude, with U.S. officials stating that an agreement was close. But Hamas had recently criticized a ceasefire proposal brokered by the U.S. for favoring Israel.

Oil markets were rattled by data showing a sharp downward revision in U.S. payrolls, which pushed up concerns over a potential recession. But they rebounded from recent losses on Thursday as data showed a sustained drawdown in U.S. inventories. 

Brent oil futures expiring in October rose 0.1% to $77.26 a barrel, while West Texas Intermediate crude futures rose 0.1% to $72.34 a barrel by 21:06 ET (01:06 GMT). 

Oil heads for weekly losses on demand fears 

Both contracts were set to lose over 4% each this week, having clocked steep losses on concerns that a U.S. recession could dent demand.

Losses in crude came even as traders saw an increased chance of an interest rate cut by the Federal Reserve in September, which battered the dollar. But the greenback rebounded on Thursday. 

While U.S. demand appeared strong in the near-term, as reflected in government data showing an outsized drawdown in inventories, traders feared that worsening economic conditions could stymie demand in the coming months.

Fears of an oil supply glut were also in play, after U.S. oil production rose to a record high of over 13 million barrels earlier in August. 

Still, recent weakness in prices could see the Organization of Petroleum Exporting Countries and allies (OPEC+) scale back some plans to raise output later this year.

The cartel had recently trimmed its outlook for global oil demand, citing concerns over weak demand in top oil importer China. 

Israel-Hamas ceasefire in focus 

U.S. officials said that a ceasefire between Israel and Hamas was close, although media reports said that Israel and Hamas were less confident over an agreement. 

Israel had earlier this week reportedly agreed to a bridging agreement proposed by the U.S.

But Hamas had criticized the agreement for allegedly favoring Israel.

The Israel-Hamas conflict has kept traders attaching some risk premium to oil prices, on the prospect of supply disruptions caused by a spillover in the conflict. But conflict has so far had a limited impact on actual crude supplies.