SINGAPORE Oil prices were not changed on Friday, with major benchmarks headed for their second straight week of losses, as the market waited for more fuel demand recovery in China to offset looming slumps in other major economies.
By 0445 GMT, Brent crude futures dropped 16 cents, or 0.2 per cent, to $82.01 a barrel, while U.S. West Texas Intermediate WTI crude futures fell 17 cents, or 0.2 per cent, to $75.71.
So far this week, the price of Brent has dropped more than 5 per cent, extending a 1 per cent loss from the previous week. After slipping 2 per cent in the previous week, the WTI has fallen by nearly 5 per cent.
There have been mixed signals on fuel demand recovery in China, the world's top oil importer.
ANZ analysts pointed out a jump in traffic in China's 15 largest cities after the Lunar New Year holiday, but also noted that Chinese traders had been relatively absent The prospect of an economic rebound in China after COVID 19 curbs were loosened, which has buoyed the oil market so far this year, along with a weaker dollar that makes the commodity cheaper for those holding other currencies.
The dollar has fallen because aggressive interest rate hikes by the U.S. Federal Reserve are not expected to happen. Even as inflation has eased, central banks for other major economies are continuing with larger rate increases.
Oil's gains have been limited by the prospect of slow growth in the US, the world's largest oil consumer, and recessions in places like Britain, Europe, Japan and Canada, despite being supported by a weaker dollar.
OANDA analyst Edward Moya said in a note that the crude demand outlook needs to be clear that China's reopening will be smooth, and that the U.S. economic growth momentum does not deteriorate quickly.
The U.S. central bank slowed to a milder rate increase after a year of larger hikes, but policymakers also predicted that ongoing increases in borrowing costs would be needed.
The US and European economies are likely to be affected by the upcoming interest rate hikes in 2023, boosted by fears of an economic slowdown that could affect global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.
The EU countries will try to set price caps for Russian oil products on Friday as investors are looking at developments on the Feb. 5 European Union ban on Russian refined products.