Oil prices drop in early trade today

10 Feb 2023 , 09:32 AM

The market continued to vacillate between concerns about a U.S. recession and prospects for a robust rebound in China, the world’s top oil importer. Oil prices dropped in early trade on Friday but remained on track for a week long gain.

Brent crude futures decreased by 28 cents, or 0.3%, to $84.22 per barrel, while U.S. West Texas Intermediate (WTI) crude futures decreased by 35 cents, or 0.5%, to $77.71.

Data released on Thursday that revealed more Americans than anticipated filed claims for unemployment benefits the previous week contributed to the dip by rekindling recessionary fears.

With crude stocks rising to their highest level since June 2021, the most recent U.S. oil inventory report this week also stoked concerns about a slowdown in the largest economy in the world.

However, as worries about additional swift interest rate hikes by the U.S. Federal Reserve have diminished, Brent and WTI have increased more than 5% so far this week, restoring most of last week’s losses.

Lower dollar expectations helped oil prices by lowering expectations for rate hikes. Oil costs less for holders of foreign currencies when the dollar is weak, which frequently leads to purchases.

The market has also been helped by Saudi Arabia’s decision to raise the official crude sales prices it makes to Asia, which is thought to be a hint that China’s demand is on the mend.

The direction of the dollar and risk sentiment may be heavily influenced by U.S. inflation data that will be released on February 14.

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