Oil prices settle up; China demand hopes outweigh recession worry

FROM：REUTERS

NEW YORK, Oct 21 (Reuters) - Oil prices settled up on Friday as hopes of stronger Chinese demand and a weakening U.S. dollar outweighed concern about a global economic downturn and the impact of interest rate rises on fuel use.

To fight inflation, the U.S. Federal Reserve is trying to slow the economy and will keep raising its short-term rate target, Federal Reserve Bank of Philadelphia President Patrick Harker said on Thursday in comments that weighed on oil.

Brent crude settled at $93.50 a barrel, up $1.12, or 1.2%. U.S. West Texas Intermediate crude (WTI) settled at$85.05 a barrel, up 54 cents, 0.6%. During the session, both benchmarks had been down by more than a dollar.

Brent was up by 2% on the week, while WTI fell about 0.7%.

Traders were squaring up positions ahead of the weekend after the WTI's November contract expiry, increasing volatility.

"The bias is to play the weekend to the long side," said John Kilduff, partner at Again Capital LLC in New York.

Swings in the U.S. dollar, which typically moves inversely with oil prices, added to choppy trade.

The dollar eased against a basket of currencies after a report said some Fed officials have signalled greater unease with big interest rate rises to fight inflation, even as they line up another big rate hike for November.