Oil prices rise in response to signs of increased demand

Oil prices rose in early trade on Friday amid signs of improving fuel demand, but gains were limited as the market awaited hints from the U.S. Federal Reserve chairman's speech regarding the likelihood of rate hikes.

At 0051 GMT, Brent crude futures climbed 46 cents, or 0.5%, to $99.80 per barrel. Futures for West Texas Intermediate (WTI) crude rose 48 cents, or 0.5%, to $93.00 a barrel. Each decreased by nearly $2 on Thursday.

Despite uncertainty over the pace of rate hikes in the United States to tackle soaring inflation, concerns about oil demand destruction diminished this week, leaving both benchmark oil contracts on track for weekly gains of approximately 3 percent.

ANZ Research analysts noted that statements made by numerous U.S. central bank officials before Chairman Jerome Powell's speech on Friday put a shadow over the economic outlook.

ANZ Research analysts observed in a research that there are indicators of a healthy market, citing optimistic traffic growth figures.

"According to the most recent TomTom Congestion Index data, traffic volumes grew dramatically throughout Asia Pacific, Europe, and North America during the week of August 24,"

ANZ also observed an increase in congestion in China, citing data from Baidu (NASDAQ:BIDU).

In addition to market anxiety anticipating Powell's speech, the probable return of Iranian crude to global markets restrained price gains.

Tehran is assessing Washington's reaction to a European Union-drafted final offer to revive a nuclear deal; the EU anticipates a response soon; however, it is doubtful how quickly Iranian oil exports will resume, even if a deal is reached.

If sanctions were lifted, it would take Iran almost a year and a half to reach its full capacity of 4 million barrels per day, an increase of 1.4 million bpd from its current output.

Nevertheless, the Organization of Petroleum Exporting Countries (OPEC) would consider decreasing output to offset any increase from Iran, according to sources from OPEC this week, after Saudi Arabia underlined the possibility of enacting cuts.