Brittany Newell’s second novel is hard to position – is it a noirish thriller, a sex-work satire, a romance? What it is not, and here the author is clear, is a memoir. Newell is a Stanford graduate and a professional dominatrix; her life has bled into Soft Core – but, as she recently told America’s NPR, into the novel’s “sensory details” rather than the facts. This murkiness is one of the defining textures of the book, giving it an uncanny, almost ghostly feel. For a story about desire and longing, it is surprisingly spooky, full of stalkers, creeps and doubles.

Ruth (or Baby or Sunday, as she sometimes calls herself) is a stripper and a newbie dominatrix working in San Francisco. She goes from her shift at the brothel to her shift at the club, weaving through a perpetually crepuscular world of private dances and all-night burger joints. She keeps herself so busy because her sweet ketamine dealer ex-boyfriend Dino has vanished into thin air and the affair she was having with her sugar daddy has fizzled out. In short, she is lonely, and so keeps herself busy facilitating the various fantasies of the Bay Area’s many unfulfilled men.

She enjoys her jobs, even though they are physically exhausting, and never judges or scorns her clients. (At least not for being clients, though Newell is quite happy to let them have it for being jerks.) Tech bros and financial traders crowd the strip club; fetishists and submissives pay her handsomely, often just to talk and play dress up; a stranger called “Nobody” role-plays suicide with her via email. All of this Ruth recounts with a genuine (if philosophical) compassion. She isn’t looking for pity, why would she be? She is providing a service, something clearly needed, and in doing so is meeting her own needs, too, beyond the material. In a way, her clients are how she comes to understand the world and her place in it.

Ruth is surrounded by a carnivalesque cast of characters: highly strung strippers, cranky madams, her ex-boyfriend’s myriad doppelgangers, and a Starbucks employee who builds dolls’ houses and sends her money each month, but not for sex. To every inhabitant of this ecosystem, Newell affords a real tenderness, even when they don’t deserve it. As such, her writing can be very moving, though never overly sentimental. Indeed, it is often quite dry, revealing the pedestrian nature of sex work behind all the scandal and taboo. There is something beautifully frank about the way Ruth talks to her clients, committing to bringing their forbidden desires alive, while acknowledging that she is making it up as she goes along.

The book is also a wonderful portrait of San Francisco, “misty, bookish and debased”, as Ruth puts it. Soft Core gives the city an atmosphere akin to the Naples of Curzio Malaparte’s The Skin: it is an undulating, pagan place just beyond human understanding. There is something Lynchian about the title, too. I don’t mean simply that it’s strange, but that it moves according to its own logic. It is filled with fantastic imagery – the sky at sunset, writes Newell, looks like “a forgotten sorbet”. There’s a languid, low-key psychedelic vibe at play and Ruth’s many observations, whether on the behaviour of her clients or just the unmistakable weirdness of email communication, have a ring of truth to them. Like something you realise when you’re high and, from then on, can never forget.

Throughout, she sees men she believes are Dino: he pops up everywhere – on the bus, at work, on the street. Meanwhile, Ruth’s co-worker Emeline seems to be slowly stealing her belongings and her personality. There’s an engaging ambiguity at play in these scenarios but they don’t necessarily satisfy. It can feel as though Newell is using them as pure narrative devices, to provide structure and tension, as if she isn’t fully committed to her own intoxicating malaise.

That is a relatively minor quibble, though, and if Soft Core does lack in resolution, the feeling you get on the final pages, when the book fades away like a fuzzy dream, makes it all A-OK.

Lauren J Joseph’s most recent book, At Certain Points We Touch (Bloomsbury), is out now

• Soft Core by Brittany Newell is published by 4th Estate (£16.99). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply