Oil up on China hopes

NEW YORK: Oil prices rose by a dollar a barrel on Friday, set for their biggest weekly gains since October, as the U.S. dollar dropped to a nine-month low and more indicators pointed toward growing demand from top oil importer China.

Brent crude futures rose by $1.01, or 1.2 percent, to $85.04 a barrel by 11:16 a.m. EST. West Texas Intermediate (WTI) crude futures gained by $1.18, or 1.5 percent, to $79.57 a barrel.

Brent has jumped 8 percent so far this week and WTI is up 7.7 percent, recouping most of last week's losses.

The U.S. dollar index 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 fueling 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 1Q21 demand estimates," Staunovo said.

ANZ analysts said a congestion index covering the 15 Chinese cities with the largest number of vehicle registrations had risen 31% from a week earlier.

Price gains "are pencilled in as traders look ahead to a further drop in Russian supply and the normalisation in China's fuel demand," PVM oil analyst Stephen Brennock said.