Oil prices dip, pausing after previous session’s surge

Oil prices edged lower in early trade on Friday, taking a pause from the previous session when futures gained steeply on optimism around higher energy demand from top crude importer China.

Brent futures dipped 13 cents to $75.54 a barrel by 00:08 GMT, while U.S. West Texas Intermediate (WTI) crude dropped 10 cents to $70.52 a barrel.

Both benchmarks surged about 3% during the prior session.

Data on Thursday showed China’s oil refinery throughput rose 15.4% in May from a year earlier, hitting its second highest total on record.

Chinese demand for oil is expected to keep climbing at an assured rate during the second half of the year, said Kuwait Petroleum Corp’s chief executive.

Still, a weak economic outlook looms over market sentiment, as China’s industrial output and retail sales growth in May missed forecasts.
Concerns around interest rates also weighed, with investors worried that higher rates would slow the U.S. and European economies and reduce oil demand. The European Central Bank raised interest rates to a 22-year high as expected on Thursday. It signaled further policy tightening, as it battles high inflation.

In the United States, data showed retail sales unexpectedly rose in May, along with higher-than-expected jobless claims last week. The news on Thursday cut the dollar to a five-week low versus a basket of other currencies.

A weaker dollar makes oil cheaper for holders of other currencies, which could boost demand.

In early trade on Friday, the dollar index edged higher.