Oil heads for strong weekly gains, thanks to hopes of Chinese ‎demand growth

Oil prices fell in early trading today, Friday, but are on their way to achieving gains of more than six percent this week, on the back of strong indications of growth in demand in China, the largest importer of crude oil, and expectations of raising US interest rates at a less severe pace.

According to Reuters, Brent crude futures fell 17 cents, or 0.2 percent, to $83.86 a barrel by 0119 GMT, while West Texas Intermediate crude futures fell 12 cents, or 0.2 percent, to 78.27 dollars.

Brent has jumped 6.7 percent so far this week, and West Texas Intermediate crude has risen 6.2 percent, recouping most of the previous week’s losses.

Analysts said that recent Chinese crude purchases and the recovery of road traffic boosted confidence in the recovery of demand in the world’s second largest economy after China reopened its borders and eased Covid-19 restrictions after last year’s protests.

“Given the focus on energy security, we expect Chinese imports to continue to rise especially at a time when crude oil storage remains a strategic priority and activity is picking up,” RBC analyst Michael Tran said in a note to clients. refining.”

In another encouraging sign, ANZ analysts said the congestion index, which covers the 15 Chinese cities with the largest number of vehicle registrations, rose 31 percent from the previous week.

“Road traffic levels in China continue to recover from record low levels after the easing of COVID-19 restrictions,” they added in a note.

Oil prices were also boosted by the dollar’s decline to its lowest level in almost nine months, after data showed that inflation in the United States fell for the first time in two and a half years, which reinforced expectations that the Federal Reserve will slow the pace of raising interest rates.

A weaker dollar usually increases demand for oil because it makes the commodity cheaper for buyers who hold other currencies.