Oil stabilizes as the market awaits demand recovery in China and the EU ban

Oil prices stabilized on Friday, but were heading to record losses for the second week, as the market awaited other indications of a recovery in fuel demand in China and the extent of the impact of an embargo imposed by the European Union on Russian oil products and a ceiling on their prices.

And by 1043 GMT, Brent crude futures fell 18 cents, or 0.2 percent, to $ 81.99 a barrel, after falling by about 1 percent in the previous session. US West Texas Intermediate crude futures also fell 14 cents, or 0.2 percent, to $75.74 a barrel.

Brent crude is heading for a decline of more than five percent this week and WTI is heading for a decline of four percent.

One of the factors that kept prices below gains was the strengthening of the dollar ahead of the US jobs data. A strong dollar reduces demand for oil because it makes dollar-denominated crude more expensive for holders of other currencies.

A Reuters survey showed that job growth in the United States in January will likely remain strong thanks to the flexibility of the labor market, but expectations of a continued slowdown in wage increases gives the Federal Reserve some room in fighting inflation.

The US central bank has eased interest rate hikes to a moderate level compared to last year, but policymakers also predicted that there will be a need for “continued increases” in borrowing costs.

Priyanka Sachdeva, market analyst at Philip Nova, said higher interest rates in 2023 are likely to affect the economies of the United States and Europe, adding to fears of an economic slowdown that is very likely to dampen global demand for crude oil.

Investors are also awaiting developments that will result from a ban imposed by the European Union on the fifth of February on Russian refinery output, with the European Union seeking to reach an agreement on Friday to put a ceiling on the prices of Russian oil products.

The Kremlin said on Friday that the European Union’s ban on Russian refinery output would lead to an increase in imbalances in global energy markets.