Oil prices are heading for their second straight weekly gains on Friday, largely spurred by positive economic prospects that should boost China’s fuel demand.
Brent futures for March delivery rose 30 cents, or 0.35%, at 0317 GMT to $86.46 a barrel, while WTI crude rose 0.6% to $80.82 a barrel, up 49 cents.
Both benchmarks were up 1% on Thursday, approaching their highest closing levels since December 1st.
China’s November oil demand climbed to its highest level since February, data showed on Thursday. OPEC predicts on Tuesday that China’s oil demand will recover this year as the country’s COVID-19 restrictions ease and drive global growth.
The US Federal Reserve is seeing signs of cooling on inflationary pressure. The dollar is heading for its second weekly decline. Oil prices were also bolstered by hopes that the US central bank will soon end the tightening cycle.
New York Fed President John Williams said on Thursday that the US central bank is seeing signs that inflationary pressures are starting to cool from hard levels.
The oil market is down on fears of a global recession, and there are still signs that it may stay tight for a while. However, eventually, it is predicted that the world’s two largest economies will also need more oil.
Moreover, the weak dollar index, which headed for the second consecutive week’s decline, provided support for prices. A weaker dollar makes currency-priced crude oil cheaper for foreign buyers.
Oil traders are potentially buying the dip right now, with optimism in China and the US.
A number of Fed officials have expressed support for a slowdown in the pace of rate hikes.
According to some economists, the Fed will end the tightening cycle after a 25 basis point increase at its next two policy meetings, and then likely keep interest rates flat for at least the rest of the year.
Fatih Birol, head of the International Energy Agency (IEA), said on Thursday that the recovery in the Chinese economy and the Russian oil industry’s struggles under sanctions could tighten energy markets in 2023.
