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Oil prices fell in the early hours of Friday

Brent and WTI are on track to gain more than 6% over the week


Oil prices slumped in the early hours of Friday, but are on track to gain more than 6% for the week amid solid signs of rising demand in China, the largest crude importer, and prospects for less aggressive rate hikes in the US.

Brent crude futures had fallen 33 cents, or 0.4%, at 0322 GMT to $83.70 a barrel, while West Texas Intermediate (WTI) crude futures slipped 20 cents, or 0.3%, to $78.19.

Brent is up 6.7% so far this week and WTI is up 6.2%, recouping most of last week’s losses.

Recent crude purchases in China and a recovery in road traffic have boosted confidence in demand recovery in the world’s second-largest economy, following the reopening of its borders and easing of COVID-19 curbs, analysts said.

Given the focus on energy security, Chinese imports are expected to continue to rise, particularly as refineries are operating rapidly and stockpiling of crude oil remains a strategic priority.

In another encouraging sign, analysts said the congestion index, which covers the 15 cities with the most vehicle registrations in China, rose 31% from a week ago.

Oil prices also rose as the dollar slid to a nearly nine-month low after data showing US inflation fell for the first time in 2.5 years and boosted expectations that rate hikes by the Federal Reserve would slow the pace.

A weaker dollar tends to increase demand for oil as it makes oil cheaper for buyers holding other currencies. The last two sessions have been driven almost entirely by Fed pivot hopes. A modest recovery is expected in crude oil.

However, some of this week’s gains in Asian trading are likely to fade.

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