Oil prices experienced a slight decline in early trading on Friday, taking a momentary break from the significant gains seen in the previous session. The surge in oil futures was driven by optimism surrounding increased energy demand from China, the world’s largest importer of crude oil.
Brent futures dropped by 13 cents to $75.54 per barrel by 00:08 GMT, while U.S. West Texas Intermediate (WTI) crude declined by 10 cents to $70.52 per barrel.
During the previous session, both benchmarks saw a surge of approximately 3%.
A recent report revealed that China’s oil refinery throughput in May increased by 15.4% compared to the same period last year, hitting the second-highest total on record.
The Chief Executive of Kuwait Petroleum Corp stated that Chinese demand for oil is expected to continue to climb steadily throughout the second half of the year.
However, concerns persist over a weak economic outlook, as China’s industrial output and retail sales growth in May fell short of forecasts.
Investors also harbor concerns about interest rates, fearing that higher rates could slow down the U.S. and European economies and subsequently reduce oil demand.
The European Central Bank raised interest rates as expected on Thursday, signaling a need for further policy tightening in order to combat high inflation.
Data from the United States indicated an unexpected rise in retail sales during May, accompanied by higher-than-expected jobless claims last week. This news caused the dollar to decrease to a five-week low against other currencies.
A weakened dollar makes oil more affordable for holders of other currencies, potentially boosting demand.
In early trading on Friday, the dollar index experienced a slight increase.
Oil prices tick up as markets look to key Chinese economic data