Oil prices head for weekly gain as China seesaw

Oil prices head for weekly gain as China seesaw

MELBOURNE Oil prices fell in early trade on Friday, but were headed for a weekly gain, with the market continuing to seesaw between fears of a recession hitting the United States and hopes for a strong fuel demand recovery in China, the world's top oil importer.

By 0117 GMT, Brent crude futures fell 28 cents, or 0.3 per cent, to $84.22 a barrel, while U.S. West Texas Intermediate WTI crude futures fell 35 cents, or 0.5 per cent, to $77.71.

The number of Americans claiming unemployment benefits went up more than expected last week, which has resulted in a downturn in the recession fears, according to a report on Thursday.

After the jobless data in the U.S. was released overnight, sentiment turned towards the downside, but I think the China demand recovery will be more important for the price outlook into the second half of 2023, said Baden Moore, National Australia Bank's head of commodity research.

The U.S. oil inventory data this week has raised fears of a slowdown in the world's biggest economy, with crude stocks having risen to their highest since June 2021, which has resulted in fears of a slowdown in the world's biggest economy.

Despite concerns about further hikes in interest rate hikes by the U.S. Federal Reserve, Brent and WTI have jumped more than 5 percent so far this week, reversing most of last week's losses.

The dollar went down due to the lower rate hike expectations, which in turn supported oil prices. A weakness in the dollar makes oil cheaper for holders of other currencies and sparks buying.

The market has been buoyed by Saudi Arabia's move to increase its official crude sales prices to Asia, which has been seen as a demand recovery in China.

The risk sentiment and dollar's direction will be impacted by the U.S. inflation data on February 14, according to analysts.

Edward Moya, OANDA analyst Edward Moya said that central banks will need to deliver more tightening than what markets are pricing in as inflation declines across Europe and the U.S.