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Oil prices fell nearly 3 per cent lower on Friday and posted a weekly decline after a U.S. central bank policymaker indicated interest rate cuts could be delayed by at least two more months.

Brent crude futures settled down $2.05, or 2.5 per cent, at $81.62 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were down $2.12, or 2.7 per cent, to $76.49.

For the week, Brent declined about 2 per cent and WTI fell more than 3 per cent. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.

Federal Reserve policymakers should delay U.S. interest rate cuts by at least another couple of months, Fed Governor Christopher Waller said on Thursday, which could slow economic growth and curb oil demand.

The Fed has held its policy rate steady in a 5.25 per cent to 5.5 per cent range since last July. Minutes of its meeting last month show most central bankers were worried about moving too quickly to ease policy.

“The entire energy complex is reacting, because if inflation begins to come back it will slow demand for energy products,” said Tim Snyder, economist at Matador Economics.

“That is not something the market wants to digest right now, especially as it is trying to figure out a direction,” he added.

Some analysts, however, say demand has remained largely healthy despite the impact of high interest rates, including in the United States.

JPMorgan’s demand indicators are showing oil demand rising by 1.7 million barrels per day (b/d) month over month through Feb. 21, its analysts said in a note.

“This compares to a 1.6 million b/d increase observed during the prior week, likely benefiting from increased travel demand in China and Europe,” the analysts said.

Meanwhile, Gaza truce talks were under way in Paris in what appears to be the most serious push in weeks to halt the conflict in Palestine and see Israeli and foreign hostages released.

Ceasefire talks could prompt the market to anticipate an easing of geopolitical tensions, Tim Evans, an independent oil market analyst, said in a note.

Still, tensions in the Red Sea continued, with attacks by Iran-backed Houthi militants near Yemen on Thursday forcing more shipping vessels to divert from the trade route.

U.S. energy firms this week added the most oil rigs since November, and the most in a month since October 2022, energy services firm Baker Hughes said.

The oil rig count, an early indicator of future output, rose by six to 503 this week, and increased by four this month.

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