Ammon News - Oil prices opened lower on Monday after China set a lower-than-expected target for economic growth this year at around 5%, and as investors cautiously awaited U.S. Federal Reserve Chair Jerome Powell's testimony this week.

Brent crude futures were trading down 58 cents, or 0.7%, at $85.25 a barrel at 0340 GMT. U.S. West Texas Intermediate (WTI) crude futures were also down 0.7%, at $79.12 a barrel.

"Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a hawkish Fed hurting the U.S. economy," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

China's closely watched growth outlook, announced on Sunday, was lower than its 5.5% gross domestic product (GDP) growth target last year. GDP grew last year by just 3%. Policy sources had told Reuters a range as high as 6% could be set for 2023.

Premier Li Keqiang said on Sunday the foundation for stable growth in China needed to be consolidated, insufficient demand remained a pronounced problem, and the expectations of private investors and businesses were unstable.

However, analysts at UBS Investment Bank upgraded their forecasts for China's GDP growth to 5.4% for 2023 and to 5.2% for 2024 from 4.9% and 4.8% respectively.

"Economic re-opening is proceeding better than we had expected earlier – the feared 'second-wave' of COVID did not materialize and there was little sign of supply disruptions," Tao Wang, Head of China economic research at UBS Investment Bank, said in a note.

Both crude benchmarks settled more than $1 higher on Friday after two sources told Reuters a report that the United Arab Emirates was considering leaving OPEC was inaccurate.

Hari said the rebound was bigger than the slump on the original news and put crude prices in "overbought territory, so (it's) hardly surprising that prices are correcting downwards this morning".

At the same time, oil prices are likely to be impacted by rate hikes across the world as global central banks tighten policy over fears of increasing inflation. Traders have started factoring in rate hikes across the world, but are hoping for smaller increases than last year.

The United States Federal Reserve's Chair Jerome Powell will testify to Congress on Tuesday and Wednesday, where he will likely be quizzed on whether larger hikes are needed in the world's largest oil consuming country.

The United States' future rate hikes are also likely to depend on what the February payrolls report reveals on Friday, followed by the February inflation report due next week.

Over the weekend, European Central Bank President Christine Lagarde said it was "very likely" they would raise interest rates this month to keep a lid on inflation.