Oil rises amid declining US inflation, but COVID restrictions in China limit this growth

Amid decreasing concerns about the recession in the United States, there is an increase in oil prices. However, after a spike in the number of COVID-19 infections in China, the world's main importer of oil, the risks of lowering fuel demand were increasing, and therefore oil prices were on the path of a weekly decline of 4%.

While WTI crude oil has dropped by more than 6% this week, Brent crude has declined by about 5%.

According to Reuters, the rise in oil prices is observed today against the background of the weakening of the US currency after the release of inflation data, which turned out to be lower than expected. According to analysts, this factor restrains expectations of higher interest rates and gives some hope for a smooth landing of the world's largest economy.

The weakening US dollar affects the growing demand for oil, due to the fact that it reduces the cost of raw materials for buyers with other currencies.

However, analysts believe the slowdown in price growth is due to the fact that China still poses a demand-side threat, due to the increased cases of COVID-19 in the Guangzhou manufacturing center, where the government on Thursday urged residents to work from home.

According to Stephen Innes, managing partner at SPI Asset Management, due to the high level of sensitivity of traders to the closure of borders in China, the growth of the oil market may be restrained for some time. He also added that today's situation is undoubtedly better than yesterday's.