Brent oil futures fell 0.4% to $84.15 a barrel, while US West Texas Intermediate (WTI) oil futures fell 0.5% to $77.65 a barrel.
The decline was fueled in part by a report showing that the number of Americans claiming unemployment benefits increased more-than-expected last week, rekindling fears of a recession.
“Mood seemed to be on the downside the day before after the US unemployment data. However, I expect the demand recovery in China to be more significant for price forecasts in the second half of 2023,” said Baden Moore, head of commodities research at the National Bank. Australia.
An increase in China’s consumer price index for January compared to December, with inflation approaching a target of about 3% set by the government last year, added caution to the oil market.
“The rise in China’s consumer price index in January reflected residents’ consumer demand ahead of the Chinese New Year, but the data is not as good as expected, reflecting the stage of a slow economic recovery. Therefore, oil prices will remain volatile at this stage,” said Leon Li, analyst CMC Markets.
The latest U.S. oil inventory data this week also raised fears of a slowdown in the world’s largest economy, as oil inventories rose to their highest level since June 2021.
However, Brent and WTI have jumped more than 5% this week, offsetting most of the previous week’s losses as fears of a further sharp hike in interest rates by the US Federal Reserve eased.
The market was supported by Saudi Arabia’s decision to raise official oil prices in Asia, which is believed to reflect a recovery in demand in China, where oil supplies are expected to rise in March.
“Refineries are likely to increase capacity from March to meet domestic demand as well as export needs,” said Emma Lee, an analyst at Vortexa.
According to analysts, the data on inflation in the US on February 14 will be a key factor for investor risk sentiment and the dollar.
“As inflation declines in Europe and the US, risks remain elevated that central banks will still have to implement tougher measures than what markets are counting on,” said Edward Moya, an analyst at OANDA.
