Oil prices down after report on UAE debating OPEC exit

Oil prices slumped on Friday after the Wall Street Journal reported that the United Arab Emirates had an internal debate about leaving OPEC and pumping more oil, but retraced some losses after a source told Reuters this was not true.

Brent crude futures were down 71 cents, or 0.8%, at $84.04 a barrel by 1456 GMT. U.S. West Texas Intermediate (WTI) crude futures dipped 57 cents, or 0.7%, to $77.59. Both benchmarks had dropped more than $2 earlier.

A source with direct knowledge of the matter told Reuters the report that the United Arab Emirates is considering leaving the Organization of the Petroleum Exporting Countries is “far from the truth.”

Oil prices this week had been boosted by strong Chinese economic data, underpinning hopes for oil demand growth, but those gains were all but erased on Friday.

“The driver was the WSJ story, with concerns that this might impact the OPEC+ production (cut) deal. The UAE and Saudi Arabia are the two countries with significant spare capacity,” said UBS analyst Giovanni Staunovo.

In China, activity in the services sector expanded at the fastest pace in six months in February and Manufacturing activity in China also grew. China’s seaborne imports of Russian oil are set to hit a record high this month.

The world’s top oil importer is becoming increasingly ambitious with its 2023 growth target, aiming as high as 6%, sources told Reuters. The market broadly shrugged off a 10th consecutive week of crude stock builds in the United States, as record exports of U.S. crude made for a smaller increase than in recent weeks.

Meanwhile, analysts polled by Reuters expect the dollar to weaken in the next 12 months, which would make dollar-denominated oil cheaper for holders of other currencies.

On the central bank front, hawkish signals continue to emanate from the European Central Bank, with Governing Council member Pierre Wunsch saying its key interest rate could climb as high as 4% if underlying inflation remains high

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