Pump jacks operate at sunset in an oil field in Midland
Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. Reuters

Oil prices extended gains for a second session on Friday as the prospect of lower exports from Russia offset rising inventories in the United States and concerns over global economic activity.

Brent crude futures rose 80 cents, or 1%, to $83.01 per barrel by 1245 GMT. On the anniversary of Russia's invasion of Ukraine, benchmark Brent crude prices were some 14% lower than a year earlier. They hit a 14-year high of nearly $128 a barrel on Mar. 8, 2022.

West Texas Intermediate U.S. crude futures (WTI) were up 43 cents, or 0.6%, to $75.82.

The benchmarks ended about 2% higher in the previous session on Russia's plans to cut oil exports from its western ports by up to 25% in March, which exceeded its announced production cuts of 500,000 barrels per day.

"Higher-than-expected U.S. crude oil inventories continue to challenge the oil demand outlook, but expectations for lower Russian production have an offsetting impact," said Yeap Jun Rong, a market strategist at IG.

U.S. inventories are at their highest level since May 2021.

U.S. crude stocks rose by 7.6 million barrels to about 479 million barrels in the week to Feb. 17, data from the U.S. Energy Information Administration said. [EIA/S]

And indications that Russian crude and refined products are accumulating on tankers floating at sea weighed further on the supply outlook.

JP Morgan said in a note on Friday that it sees short-term prices more likely to drift lower towards the $70s than rise "as global growth headwinds strengthen and excess 'dark' inventory exacerbated by a flooding of Russian oil is worked off".

The bank also said it expects the Organization of the Petroleum Exporting Countries (OPEC) to cut production in order to limit oil price declines.

For the week, oil prices are largely flat, after the previous week's declines of about 4%, weighed also by concerns about rising interest rates that could strengthen the dollar and curb fuel demand.

Minutes from the latest U.S. Federal Reserve meeting indicated that a majority of officials remained hawkish on inflation and tight labour market conditions, signalling further monetary tightening.

The prospect of further rate hikes supported the dollar index, which was set for a fourth-straight week of gains. The index is now up about 2.5% for the month. [FRX/]

A firm dollar makes commodities priced in the greenback more expensive for holders of other currencies.