(Updates prices, adds weekly loss in headline, first para)
By Yuka Obayashi and Sudarshan Varadhan
Feb 17 (Reuters) - Oil prices were on track for weekly
losses of 2.5% as strong U.S. economic data heightened concerns
that the Federal Reserve would further tighten monetary policy
to tackle inflation, a move that could hit fuel demand.
Brent crude futures dropped 96 cents, or 1.13%,
to $84.18 per barrel by 0744 GMT on Friday, while U.S. West
Texas Intermediate (WTI) crude futures shed 97 cents, a
1.24% loss, to $77.52. Both benchmarks were headed for a weekly
decline of more than 2.5%.
Data showed that the U.S. producer price index (PPI) rose
0.7% in January, after declining 0.2% in December. Meanwhile,
jobless claims unexpectedly fell to 194,000, compared to the
200,000 forecast, according to a Reuters poll.
"Strong U.S. data bolstered concerns over rate hikes and
prompted a rise in U.S. Treasury yields, which weighed on oil
and other commodity prices," said Kazuhiko Saito, chief analyst
at Fujitomi Securities Co Ltd.
Tina Teng, an analyst at CMC Markets, said U.S. crude
stockpiles rising to a 17-month high suggested that demand was
weakening, resulting in lower prices.
"Crude oil prices were also lower due to risk-off trades
following the selloff on Wall Street following the PPI data and
a strong U.S. dollar," Teng said.
Oil prices have seesawed over the past weeks between
fears of a recession hitting the United States amid
inflation-fighting rate hikes and hopes for a pick-up in demand
in China, the world's top oil importer.
The International Energy Agency (IEA) said this week that
China would make up nearly half of this year's oil demand growth
after it relaxed its COVID-19 curbs, but restrained production
by OPEC+ countries - members of the Organization of the
Petroleum Exporting Countries and allies - could mean a supply
deficit in the second half.
Saudi Energy Minister Prince Abdulaziz bin Salman said the
current OPEC+ deal to cut oil production targets by 2 million
barrels per day would be locked in until the end of the year,
adding he remained cautious on Chinese demand.
(Reporting by Yuka Obayashi; Editing by Kenneth Maxwell and
Jamie Freed)
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