Its Weekly Advance Is Fueled by Optimism on China's Demand For Crude Oil

Oil prices declined in early trade on Friday, but were poised for weekly gains of more than 6% due to robust indicators of demand growth in China, the world's largest crude oil importer, and expectations of less aggressive interest rate hikes in the United States.

Brent crude prices fell 17 cents, or 0.2%, to $83.86 a barrel at 01:19 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 12 cents, or 0.2%, to $78.27 per barrel.

Brent is up 6.7% and WTI is up 6.2% so far this week, recouping a significant portion of the losses from the previous week.

Recent Chinese petroleum purchases and an increase in road traffic have, according to analysts, strengthened expectations for a demand recovery in the world's second-largest economy following the reopening of its borders and the easing of COVID-19 restrictions in the wake of last year's demonstrations.

RBC commodity strategist Michael Tran stated in a client note, "Given the emphasis on energy security, we anticipate Chinese imports will continue to rise, especially as refinery runs increase and crude stockpiling remains a strategic goal."

The congestion index for the 15 Chinese cities with the highest number of vehicle registrations, as assessed by ANZ analysts, increased 31% from the previous week.

Analysts from ANZ claimed in a report that "China's road traffic levels continue to rise from record low levels after COVID-19 restrictions were lifted."

The dollar's slide to a nearly nine-month low in response to news that U.S. inflation fell for the first time in more than two and a half years has strengthened speculation that the Federal Reserve may slow the rate of rate hikes.

A weaker dollar tends to increase oil demand since it makes the commodity more affordable for buyers holding foreign currencies.