Optimism about Chinese demand puts crude on track for strong weekly rise

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Oil prices rose on Friday and were on track to gain more than 7 percent for the week on solid signs of demand growth in China, the world’s top crude importer, and expectations of less aggressive U.S. interest rate hikes.

The futures of the Brent crude They were up 53 cents, or 0.6 percent, at $84.56 a barrel at 1027 GMT. Crude oil futures West Texas Intermediate (WTI) gained 55 cents, or 0.7 percent, to $78.94 a barrel.

Brent is up 7.6% so far this week and WTI 7%, recovering most of last week’s losses.

Analysts noted that China’s recent crude purchases and a rebound in road traffic fueled confidence in a demand recovery in the world’s second-largest economy following the reopening of its borders and the easing of COVID-19 restrictions after last year’s protests.

In another encouraging sign, ANZ analysts noted that a congestion index covering the 15 Chinese cities with the highest number of vehicle registrations had risen 31% from the previous week.

Oil prices have also been helped by the dollar’s fall to near nine-month lows after data showed U.S. inflation fell for the first time in two-and-a-half years, bolstering expectations that the Federal Reserve will slow the pace of rate hikes.

Weakness in the greenback tends to boost demand for oil, as it lowers the price of the commodity for buyers with other currencies.

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