OPEC and IEA forecast growing Chinese oil demand in 2023
Hopes for Fed downshift on interest rate hikes also support
Market shrugs off large increase in U.S. crude inventories

LONDON, Jan 20 Reuters Oil rose on Friday and was heading for a second straight weekly gain, spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world39;s secondbiggest economy.

The lifting of COVID19 restrictions in China is set to increase global demand to a record high this year, the International Energy Agency IEA said on Wednesday, a day after OPEC also forecast a Chinese demand rebound in 2023.

Brent crude gained 38 cents, or 0.4, to 86.54 a barrel by 0912 GMT. U.S. crude advanced 74 cents, or 0.9, to 81.07.

Many traders believe it is highly likely that we are going to see higher demand coming from China as it continues to dismantle its COVID policies, said Naeem Aslam, analyst at broker Avatrade.

Both benchmarks were heading for a weekly gain of about 1.5.

Oil was also supported by hopes that the U.S. central bank will soon downshift to smaller rises in interest rates and by hopes for the U.S. economic outlook.

A Reuters poll predicted that the U.S. Federal Reserve will end its tightening cycle after increases of 25 basis points at each of its next two policy meetings and is then likely to hold rates steady for at least the rest of the year.

The chances of a soft landing for the U.S. economy appear to be growing,…