Oil settled up about $1 a barrel on Friday and notched a second straight weekly gain as China’s economic prospects brightened, boosting expectations for fuel demand in the world’s second-biggest economy.
China’s lifting of COVID-19 restrictions should bring global demand to a record high this year, the International Energy Agency (IEA) said on Wednesday, a day after OPEC also forecast a Chinese demand rebound.
Brent crude settled at $87.63 a barrel, up $1.47, or 1.7%. U.S. crude settled at $81.31 a barrel, gaining 98 cents, or 1.2%.
“Many traders believe it is highly likely that we are going to see higher demand coming from China as it continues to dismantle its COVID policies,” said Naeem Aslam, analyst at broker Avatrade.
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For the week, Brent logged a 2.8% increase and the U.S. benchmark saw a 1.8% rise.
Oil was also supported by hopes that the U.S. Federal Reserve will soon downshift to smaller interest rate hikes, which could brighten the U.S. economic outlook.
A Reuters poll predicted the Fed will end its tightening cycle after increases of 25 basis points at each of its next two policy meetings and should then hold rates steady for at least the rest of the year.
Chances of a “soft landing” for the U.S. economy appear to be growing, Federal Reserve Vice Chair Lael Brainard said on Thursday. The Fed’s next rate-setting meeting is over Jan. 31 to Feb. 1.
