Oil prices increase further due to growing optimism about a Chinese recovery
By Ambar Warrick
Investing.com– Oil prices extended gains on Wednesday as increasing optimism over a recovery in Chinese demand largely offset fears of a global economic slowdown in 2023, with the IEA’s monthly report now coming into focus.
The Organization of Petroleum Exporting Countries (OPEC) stated in a Tuesday report that a Chinese reopening could lead to a strong rebound of crude demand for this year. The cartel did not change its forecast for global oil demand, which was unchanged at 2.22million barrels per day.
Now, the focus is on the monthly report from The International Energy Agency (IEA) Due later in the day.
Crude markets closed higher after Tuesday’s OPEC Report. They also received support from data showing the strength of the OPEC data. Chinese economy grew more than expected in the fourth quarter, 2022. While economic growth in the world’s largest oil importer still shrank substantially in 2022 from the prior yearThe markets believe that the country will soon see a strong recovery after the removal of anti-COVID regulations.
Brent oil futures rose 0.7%, to $86.53/barrel, while West Texas Intermediate crude crude futures rose 0.8%, to $81.10/barrel by 22:34 ET (03.34 GMT). In a late-session rally, both contracts surged more than 2% Tuesday.
China’s air and road transport indicators indicate a sharp increase in activity since the lifting most lockdown restrictions. Also, in January, China opened its international borders for only the third time in three years. This is a clear shift away from the economically destructive zero-COVID policies.
Markets are uncertain about the timing of a Chinese economic revival this year due to China’s worst COVID-19 epidemic.
Fears of a global recession in 2023 have also limited gains in crude markets, amid several warnings of slowing growth in the world’s largest economies.
This week’s focus is on a number of economic indicators from the U.S. and eurozone. U.S. retail sales industrial production Data due Wednesday will be especially important for markets as they offer insight into manufacturing activity as well consumer strength, which are two of the main drivers of U.S. oil demand.
The dollar also made a slight recovery from its seven-month low, which placed some pressure on commodities prices in the greenback.
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