Crude oil tanker in Zhoushan
An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS Reuters

Oil prices opened lower on Monday after China set a modest target for economic growth this year of around 5%, lower than market expectations of 5.5% growth in the world's second- largest oil consumer.

Brent crude futures were trading down 50 cents, or 0.6%, at $85.33 a barrel at 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 46 cents, or 0.6%, at $79.22 a barrel.

China's closely watched growth outlook was down from last year's target of 5.5% and came in at the low end of expectations. Policy sources had recently told Reuters a range as high as 6% could be set.

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.

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. Australia's central bank is expected to lift rates by 25 basis points on Tuesday.