Oil is rising thanks to hopes of a slowdown in rate hikes

Oil prices rose on Friday on optimism that the Federal Reserve will end the monetary tightening cycle, boosting the economy and supporting fuel demand.

By 0113 GMT, Brent crude futures for March delivery rose 48 cents, or 0.6 percent, to $86.64 a barrel, while US crude prices increased 54 cents to $80.87 a barrel, up 0.7 percent.

Both benchmarks are heading for a second consecutive week of gains. Both closed up 1% on Thursday, near their highest closing levels since Dec. 1.

Most economists polled by Reuters believe the Fed will end its monetary tightening cycle after raising 25 basis points at each of its next two policy meetings, then will likely keep interest rates steady for at least the rest of the year.

New York Federal Reserve Chairman John Williams said on Thursday that the US central bank will raise interest rates further, and that he sees signs that inflationary pressures may be starting to ease from very high levels.

A number of other US central bank officials have expressed support for a downward shift in the pace of interest rate hikes.

At the same time, the dollar index is heading for its second consecutive weekly decline. A weaker dollar makes crude oil, priced in the greenback, cheaper for buyers abroad.

Also supporting prices, Chinese oil demand rose by about one million barrels per day to 15.41 million barrels per day in November from the previous month, the highest level since February, according to the latest export figures published by the Joint Data Initiative (JODI).

And Fatih Birol, Executive Director of the International Energy Agency, said on Thursday that energy markets may witness a shortage of supplies in 2023 due to the recovery of the Chinese economy and the difficulties facing the Russian oil industry in light of the sanctions.