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HOUSTON: Oil held steady in choppy trading on Thursday and was on track for a third weekly gain as markets weighed further production cuts targeted by OPEC+ and a drop in US oil inventories against fears about the global economic outlook.

Brent crude fell 33 cents, or 0.4%, to $84.68 a barrel by 12:48 p.m. ET (1648 GMT). West Texas Intermediate US crude dipped 33 cents, or 0.4%, to $80.25. There is no trading on Friday because of the Good Friday holiday.

Brent and US crude both jumped more than 6% this week after OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, surprised the market on Sunday with a pledge of production cuts.

Hedge funds have bought crude all week, moving from the sidelines back into “risk on” mode, said Dennis Kissler, senior vice president of trading at BOK Financial.

Oil drew support from a steeper-than-expected drop in US crude inventories. Gasoline and distillate inventories also declined, hinting at rising demand.

Limiting gains, however, US labor market data pointed to slowing economic growth, and there was also slower-than-expected growth in the US services sector.

“Demand destruction as function of the threat of recession is greater than the cut by OPEC+,” said Robert Yawger, said director of energy futures at Mizuho Securities.

Buyers of put options that hedge downside risk were more active than buyers of call options, which bets on rising prices, implying traders were worried prices could fall, Yawger added.

The dollar also gained against most of its peers on Thursday. A stronger dollar makes crude more expensive for holders of other currencies and tends to reflect greater risk aversion among investors.

“The oil market’s bullish momentum may have paused, but upside potential remains given the tightening supply backdrop,” said Stephen Brennock of oil broker PVM.

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