Oil prices are set to break a two-week streak of losses despite trading marginally lower in the early hours of Friday amid higher energy demand from China, the largest crude importer, and optimism about a weaker dollar.
Brent futures were down 17 cents, or 0.2%, to $75.50 a barrel as of 0341 GMT. West Texas Intermediate (WTI) crude fell 16 cents, again 0.2%, to $70.46 a barrel. Both benchmarks increased by about 3% in the previous session.
Data on Thursday showed China’s May refinery rate rose 15.4% year-on-year, reaching the second-highest on record. China’s oil demand is expected to continue to rise at a firm rate in the second half of the year.
Still, the Chinese economy slowed in May, more stimulus is expected and a weak economic outlook is weighing on market sentiment.
Data released in the United States on Thursday showed retail sales rose unexpectedly in May and jobless claims were higher than expected last week. Motor vehicles and construction materials boosted US retail sales in May.
The dollar fell to a five-week low against a basket of other currencies. A weaker dollar increases demand as it makes oil cheaper for holders of other currencies.
Analysts also expect voluntary oil production cuts implemented by the Organization of the Petroleum Exporting Countries and its allies in May and by Saudi Arabia in July to support prices.
The global growth outlook remains vulnerable to additional shocks from aggressive rate hike campaigns, while crude prices struggle to find support.
The European Central Bank raised interest rates to the highest level in 22 years as expected on Thursday. The US Federal Reserve this week signaled an increase of at least half a percentage point until the end of the year.
Higher interest rates ultimately increase borrowing costs for consumers, which can slow economic growth and reduce oil demand.
