Oil prices slumped in early trade on Friday, but are on track to post gains of around 2% for the week. Recovery in factory activity in China offsets the rising US crude oil inventories and growing concerns about possible interest rate hikes in Europe.
Brent crude futures were down 39 cents, or 0.5%, to $84.36 a barrel at 0147 GMT. West Texas Intermediate (WTI) crude futures were down 41 cents, or 0.5%, at $77.75 per barrel.
Despite opening low on Friday, Brent is up about 1.6% so far this week and is on its second consecutive weekly earnings track. WTI, on the other hand, rose nearly 2%, recovering from a slight loss in the previous week in hopes of strong growth in the fuel. Demand is increasing in China, the world’s largest oil importer.
Manufacturing activity in China grew at its fastest pace in more than a decade last month, bolstering expectations for fuel demand recovery. Sea imports of Russian oil will hit a record level this month.
The Atlanta Fed President’s comments that the Fed should maintain a “fixed” quarter-point rate eased concerns in the US and helped bolster oil prices on Thursday, even after strong unemployment data.
However, the market remains wary of a faster-than-expected rise in consumer prices in France, Spain, and Germany, raising expectations for further rate hikes by the European Central Bank (ECB).
According to the EU statistics agency’s first estimate, eurozone inflation rose to 8.5% in February, a higher-than-expected rate.
Crude oil stock increases in the US for the 10th consecutive week also put the market under pressure this week.
