Oil prices dipped slightly in early Asia trade on Friday, reversing the previous session’s nearly 3% gain to a one-week high, as markets weighed the positive outlook for solid demand in top oil importer China against the negative prospect for further U.S. interest rate hikes.
Brent futures dropped US$0.15, or 0.20%, to US$75.52 a barrel, while US West Texas Intermediate (WTI) crude dropped US$0.19, or 0.27%, to US$70.43, as of 10.37 A.M. Bangkok time.
This week, oil prices fluctuated wildly as worries about rising interest rates in key economies and worsening global economic prospects countered optimism about China.
A succession of interest rate cuts earlier this week raised optimism for a Chinese economic recovery, which traders expect to lift crude demand to record highs.
However, the Federal Reserve has maintained its current interest rate this week and hinted that it may increase rates a further two times in this year. This was followed by a rise in interest rates from the European Central Bank, which also signaled a hawkish stance on further rate increases.
With the global economy continuing to deteriorate, the future of oil is still uncertain. Despite recent output cut by the Organization of the Petroleum Exporting Countries, economists forecast that this year’s oil supply will exceed demand.