Oil prices head for weekly gain on China growth hopes

Crude oil tanker in ZhoushanAn aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS

SINGAPORE, March 3 (Reuters) – Oil prices slipped in early trade on Friday but were on track to post gains of nearly 2% for the week as a rebound in China's factory activity offset growing concerns about rising U.S. crude stocks and potential rate hikes in Europe.

Brent crude futures fell 39 cents, or 0.5%, to $84.36 a barrel at 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 41 cents, or 0.5%, at $77.75 a barrel%.

Despite opening lower on Friday, Brent has climbed about 1.6% so far this week, on course for a second consecutive week of gains, while WTI has jumped about 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.

Manufacturing activity in China grew last month at the fastest pace in more than a decade, reinforcing expectations of a fuel decmand recovery. Seaborne imports of Russian oil are set to hit a record high this month.

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Comments by Atlanta Federal Reserve President Raphael Bostic that the Fed should stick with "steady" quarter-point rate eased concerns in the U.S., and helped support oil prices on Thursday even after strong unemployment data.

However, the market remains wary of a faster than expected rise in consumer prices in France, Spain and Germany, which boosted expectations of further interest rate increases by the European Central Bank (ECB).

Euro zone inflation rose to a higher than expected annual rate of 8.5% in February, according to a first estimate from the EU's statistics agency.

A 10th consecutive week of crude stock builds (USOILC=ECI) in the United States also weighed on the market this week.

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