Oil prices up thanks to hopes of interest rate hike slowdown

Oil prices rose today, Friday, amid optimism that the Federal Reserve (the US central bank) will end the monetary tightening cycle, which will boost the economy and support the demand for fuel.

By 0113 GMT, Brent crude futures for March delivery rose 48 cents, or 0.6 percent, to $86.64 a barrel, while US crude prices increased 54 cents to $80.87 a barrel, up 0.7 percent.

According to “Reuters”, the two benchmarks are heading to record gains for the second week in a row. Both closed up 1 percent on Thursday, near their highest closing levels since Dec 1^st.

Most economists in a Reuters poll see the Fed ending its tightening cycle after raising 25 basis points at each of its next two policy meetings, then likely keeping interest rates steady for at least the rest of the year.

New York Federal Reserve Chairman John Williams said on Thursday that the US central bank will raise interest rates further, and that he sees signs that inflationary pressures may be starting to ease from very high levels.

Moreover, a number of other US central bank officials expressed their support for a downward shift in the pace of interest rate hikes.

At the same time, the dollar index is heading for its second consecutive weekly decline. A weaker dollar makes crude oil, priced in the greenback, cheaper for overseas buyers

Also supporting prices, Chinese demand for oil rose by about one million barrels per day to 15.41 million barrels per day in November from the previous month, the highest level since February, according to the latest export figures published by the Joint Data Initiative (JODI).

The director of the International Energy Agency, Fatih Birol, said on Thursday that energy markets may witness a shortage of supplies in 2023 due to the recovery of the Chinese economy and the difficulties facing the Russian oil industry in light of the sanctions.