Oil prices fell on Friday, but were poised for a weekly gain as renewed optimism on China’s demand recovery overrode recession worries brought by growing crude inventories in the U.S. and tightening monetary policy in Europe.
Brent crude futures dipped 18 cents, or 0.2%, to $84.57 a barrel at 0739 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 16 cents, also 0.2%, at $78.00 a barrel.
The retreat in oil prices came as euro zone inflation fell less than expected last month, which boosted expectations of further interest rate increases by the European Central Bank (ECB).
ECB President Christine Lagard confirmed on Thursday the central bank is still looking to hike rates by a half-percentage-point on March 16. Markets are also pricing in another 50 basis point hike in May.
Brent has climbed about 1.7% so far this week, on course for a second consecutive week of gains, while WTI has jumped about 2.2%, rebounding from a small loss the previous week on hopes of strong growth in fuel demand in China, the world’s top oil importer.
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