MELBOURNE: Oil prices made modest gains in early trade today but were heading for a second straight week of losses, as the market looked for more signs of a strong recovery in fuel demand in China to offset looming slumps in other major economies.
Brent crude futures rose 16 cents, or 0.2 per cent, to $82.33 a barrel this morning, while U.S. West Texas Intermediate (WTI) crude futures gained 18 cents, or 0.2 per cent, to $76.06 a barrel.
So far this week, Brent has dropped by 4.8 per cent, extending a 1.1 per cent loss from the previous week. WTI has fallen by 4.5 per cent after sliding 2 per cent in the prior week.
Mixed signs of a fuel demand recovery in China, the world’s top oil importer, have kept a lid on the market.
Analysts pointed to a sharp jump in traffic in China’s 15 largest cities following the Lunar New Year holiday, but also noted that Chinese traders had been “relatively absent” from markets.
The prospect of an economic rebound in China after COVID-19 curbs eased 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 no longer expected, whereas other major economies are continuing with bigger rate increases even as inflation has eased.
While supported by a weaker greenback, oil’s gains have been limited by the prospect of slow growth in the United States, the world’s biggest oil consumer, and recessions in places including Britain, Europe, Japan and Canada.