Oil prices rose slightly on Monday tracking optimistic comments on a recovery in Chinese demand from the International Energy Agency, although markets were still nursing steep weekly losses on fears of tighter U.S. monetary policy. International Energy Agency head Fatih Birol reiterated the agency’s call that China will push global crude demand to record highs this year, and said there were already early indications that the world’s second-largest economy was recovering. His comments come even as PMI data from last week painted a somewhat mixed picture of the country. While activity has recovered with the lifting of anti-COVID measures, some facets of the economy- particularly the manufacturing sector- are still struggling from rising COVID-19 cases. Brent oil futures rose 0.5% to $80.23 a barrel, while West Texas Intermediate crude futures rose 0.3% to $73.64 a barrel by 20:48 ET (01:48 GMT). Both contracts tumbled 2.7% and 3.7% respectively on Friday. Crude markets slumped over 7% in the past week, with a bulk of losses coming on Friday after labor data showed that U.S. nonfarm payrolls unexpectedly grew in January. The reading boosted the dollar and ramped up bets on more interest rate hikes by the Federal Reserve, which could weigh on the economy and dampen crude demand.

Focus This Week is on a Series of Addresses By Fed Members.

starting with Chair Jerome Powell on Tuesday. Crude prices have tumbled in recent weeks on fears of a potential slowdown in economic growth this year, which could dampen demand. Rising interest rates across the globe have also furthered this notion. A rebound in the dollar weighed heavily on the crude market, given that it makes oil more expensive for international buyers. Markets are now awaiting any more signs of an economic recovery in China, starting with inflation readings for January due later this week. But optimism over a Chinese economic recovery was somewhat dulled by increased geopolitical tensions between the world’s two largest economies, after the U.S. shot down a suspected Chinese spy balloon off the coast of South Carolina this weekend. China condemned the strike. An OPEC+ decision to hold production steady also weighed on crude prices last week, even as the cartel expressed optimism over a demand recovery in China. Unexpectedly large builds in U.S. crude inventories also pointed to a potential near-term supply glut in the world’s largest oil consumer, which is expected to keep oil prices muted.