Oil Prices Drop but Head for Weekly Gains on Optimism about China’s Recovey

Oil prices fell in early Asia trading on Friday, but were still on track to register weekly gains of over 2% as a rebound in China’s industrial activity countered mounting concerns about swelling U.S. oil supplies and future rate hikes in Europe.

As of 10:30 AM (Thai time), the price of a barrel of Brent crude had dropped 33 cents, or 0.39%, to $84.42. Futures for U.S. West Texas Intermediate (WTI) crude lost 28 cents, or 0.36%, to $77.88 a barrel.

While opening lower on Friday, Brent rose around 1.6% this week, on track for a second consecutive week of gains, while WTI added almost 2%, recovering from a modest loss the previous week on expectations of robust increase in fuel consumption in China, the world’s top oil importer.

Recent data from China show that manufacturing expanded at its fastest rate in over a decade, lending support to predictions of a revival in energy sector demand. This month is expected to see a historic high in the amount of Russian oil imported via sea.

Oil prices were supported on Thursday despite encouraging U.S. employment data thanks to comments made by Atlanta Federal Reserve President Raphael Bostic. Bostic said the Fed should maintain a “steady” quarter-point rate.

A faster-than-anticipated increase in consumer prices in France, Spain, and Germany has increased market concerns about future interest rate hikes by the European Central Bank (ECB).