By Shariq Khan
NEW YORK (Reuters) -Oil prices rose by about a dollar a barrel on Friday, set for their biggest weekly gains since October, as the U.S. dollar dropped to a seven-month low and more indicators pointed toward growing demand from top oil importer China.
Brent crude futures rose by 93 cents, or 1.1%, to $84.96 a barrel by 1:39 p.m. EST (1839 GMT). West Texas Intermediate (WTI) crude futures were set for their seventh-straight session of gains, rising by $1.25, or 1.6%, to $79.64 a barrel.
Brent has jumped 8% so far this week and WTI is up 7.7%, recouping most of last week’s losses.
The U.S. dollar index slumped to the lowest in more than seven months, a day after data showed inflation fell in December for the first time in 2-1/2 years, feeding hopes the Federal Reserve would slow its rate hikes.
A weaker greenback tends to boost demand for oil, making it cheaper for buyers holding other currencies.
Recent Chinese crude purchases and a pick-up in road traffic in the country are also fuelling hopes of a demand recovery in the world’s second-largest economy following the reopening of its borders and easing of COVID-19 curbs after protests last year.
“Everyone is looking at Chinese mobility indicators and they point upward, indicating recovering oil demand and supporting prices,” said UBS analyst Giovanni Staunovo.
“Next thing to watch is if this translates also into higher Chinese crude imports and if energy agencies (IEA, OPEC) revise upwards their (first quarter) demand estimates,” Staunovo said.
The Organization of the Petroleum Exporting Countries and allies, including Russia, will meet in February to assess market conditions, and there is some concern that the group could cut oil output again to lift prices after recent declines.
“We have the seven-day winning streak under our belt… but we are still nowhere near where we were the last time OPEC+ folks cut production,” Mizuho analyst Robert Yawger said.
OPEC+ had announced a 2-million-barrel-per-day cut to production in October as global oil prices fell under $90 a barrel.
(Reporting by Shariq Khan, additional reporting by Ahmad Ghaddar, Mohi Narayan and Sonali Paul; Editing by Conor Humphries, David Evans, David Gregorio and Cynthia Osterman)