Oil prices decline in early trade

3 Mar 2023 , 08:54 AM

Although oil prices fell in early Friday trade, they were still expected to end the week up almost 2% as a rebound in factory activity in China countered mounting concerns about swelling U.S. crude stocks and impending rate hikes in Europe.

Brent crude futures were down 39 cents, or 0.5%, to $84.36 per barrel. At $77.75 a barrel, West Texas Intermediate (WTI) oil futures were down 41 cents, or 0.5%.

While WTI has risen over 2%, recovering from a tiny loss the previous week on expectations of robust increase in fuel consumption in China, the world’s top oil importer, Brent has risen approximately 1.6% so far this week despite opening lower on Friday, on course for a second consecutive week of gains.

China’s manufacturing activity increased last month at its quickest rate in more than ten years, supporting predictions of a resurgence in gasoline demand. This month, seaborne imports of Russian oil are anticipated to reach a new high.

Raphael Bostic, the president of the Atlanta Federal Reserve, said that the Fed should maintain its ‘steady’ quarter-point rate, which allayed American fears and supported oil prices on Thursday even in the face of positive unemployment figures.

A faster-than-expected increase in consumer prices in France, Spain, and Germany has raised expectations of more interest rate increases by the European Central Bank, although the market is still cautious about this development (ECB).

According to a preliminary estimate from the EU statistics office, inflation in the euro zone increased to an annual rate of 8.5% in February, which was higher than anticipated.

This week’s market volatility was also brought on by the United States’ 10th straight week of crude stock building.

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