Oil is on course for a second straight week of losses, with investors hoping for clearer signs of recovering fuel demand in China to offset an economic slump across the West.
Both major benchmarks were little changed in Friday morning’s early trading, with Brent Crude down 0.23 percent at $81.98 per barrel, while WTI Crude is down 0.29 percent at $75.66 per barrel.
The lack of movement consolidates definitive downturns in prices this week, with Brent Crude dropping more than five percent in value – extending a one percent loss from the previous week.
WTI Crude has also fallen by nearly five percent after sliding two percent the week before.
Investor anticipation of an economic rebound in China following its U-turn on Zero-Covid restrictions has propped up the oil market so far this year, alongside a weaker dollar that makes the commodity cheaper for those holding other currencies.
However, there has so far been mixed signals on fuel demand recovery in China, which is the world’s top oil importer.
This has weighed down prices in recent weeks.
For instance, ANZ analysts noted a sharp jump in traffic in China’s 15 largest cities following the Lunar New Year holiday, but also recognised that Chinese traders had been “relatively absent”.
Craig Erlam, senior market analyst at OANDA said: “Prices have been on the decline over the last week or so as investors have become less confident in the strength of the outlook, something we could see change repeatedly in this first quarter due to the lack of visibility on interest rate and China’s Covid transition.”
The dollar has dropped in value, as aggressive interest rate hikes by the US Federal Reserve are no longer expected.
While supported by a weaker greenback, oil’s gains have been limited by the prospect of slow growth in the US, and recessions in UK, continental Europe, Japan and Canada.
Investors are also eyeing developments on the expected EU ban on Russian refined goods, as the bloc pushes for a deal to set price caps on all Kremlin-backed oil products.