Oil prices popped up on media reports that US air strikes on Venezuela could begin within hours only to fall after US President Donald Trump issued a denial of the report on social media.
Brent crude futures were up six cents, or 0.09 per cent, at $65.06 a barrel by 11:12 CDT (16:12 GMT), while US West Texas Intermediate crude was at $60.50 a barrel, down seven cents, or 0.12 per cent.
"Is this Donald Trump’s trick or treat?" said Phil Flynn, senior analyst for Price Futures Group, noting that Trump had earlier denied reports of a planned attack on Iran before carrying out airstrikes against the Islamic Republic.
"There definitely was an impact on the market when the first report of a planned attack on Venezuela came out," Flynn said. "If there is an attack over the weekend, prices will spike on Monday."
The United States has deployed a task force centred around the nation’s largest aircraft carrier, Gerald Ford, off the coast of Venezuela, which has been a focus of US naval activity in the Caribbean in recent weeks.
The US dollar was near three-month highs against major currencies, making purchases of dollar-denominated commodities such as oil more expensive.
Meanwhile, sources told Reuters that Saudi Arabia, the world’s top oil exporter, may reduce its December crude price for Asian buyers to multi-month lows, sounding a bearish note.
Oil also slipped after an official survey showed China’s factory activity shrank for a seventh month in October.
Brent and WTI are set to fall 2.6 per cent and two per cent, respectively, in October with the Organization of the Petroleum Exporting Countries and major non-OPEC producers ramping up output.
More supply will also cushion the impact of Western sanctions disrupting Russian oil exports to its top buyers China and India.
A Reuters survey forecast Brent will average $67.99 per barrel in 2025, about 38 cents above last month’s estimate. WTI is expected to average $64.83, slightly above September’s estimate of $64.39.
OPEC+ is leaning towards a modest output boost in December, people familiar with the talks said ahead of the group’s meeting on Sunday.
Meanwhile, Saudi Arabia’s crude exports hit a six-month high of 6.407 million bpd in August, data from the Joint Organizations Data Initiative showed.
A US Energy Information Administration report also showed record production of 13.6 million bpd last week.
Trump said on Thursday that China has agreed to begin the process of purchasing US energy and that a very large-scale transaction may take place involving the purchase of oil and gas from Alaska.
(Additional reporting by Florence Tan; Editing by Susan Fenton and Tomasz Janowski)