Oil prices rising due to rising demand in China
2023.03.01 03:58
Oil prices rising due to rising demand in China
By Kristina Sobol
Budrigannews.com – On Wednesday, a strong increase in manufacturing in China, the world’s largest crude importer, improved the outlook for global fuel demand, extending oil prices’ gains for a second session.
At 0445 GMT, May futures were up 46 cents, or 0.6%, to $83.91 a barrel. U.S. West Texas Intermediate (WTI) crude rose 0.6% to $77.47 a barrel in April, up 42 cents.
Expectations of a significant uptick in demand in China, the world’s second-largest crude consumer, continue to support oil prices.
According to IG market strategist Yeap Jun Rong, “Another round of upside surprise in China’s PMI further provides conviction of a stronger-than-expected recovery, which supports a more optimistic outlook for oil demand.”
Yeap continued, “That provided a much-needed catalyst for oil prices to tap into for some relief following (Monday’s) previous sell-off, with China’s recovery demonstrating that it is on track to cushion some of the global demand weakness from hawkish central banks.”
The purchasing manager’s index (PMI), which was released on Wednesday by Caixin/S&P Global, showed that factory activity in China increased for the first time in seven months.
The manufacturing sector experienced its fastest expansion since 2012 in February, according to official government PMI data released on Wednesday.
However, indications of rising crude stockpiles in the United States, the world’s largest oil consumer and producer, countered the strong demand signal.
According to market sources who cited American Petroleum Institute (API) figures on Tuesday, U.S. oil inventories increased by 6.2 million barrels in the week that ended on February 24. [ API/S] Despite this, the API data show that inventories of gasoline decreased by 1.8 million barrels and inventories of distillate fuels, such as diesel and jet fuel, decreased by 340,000 barrels.
Data on stockpiles from the official U.S. government are due later on Wednesday.
In a Reuters poll, analysts expected a rise of nearly half a million barrels last week, and that data is expected to show a 10th consecutive week of builds.
Data pertaining to the Organization of the Petroleum Exporting Countries (OPEC) revealed additional indicators of rising supply.
A Reuters survey found that OPEC produced 28.97 million barrels per day (bpd) in February, an increase of 150,000 bpd from January. Still, output is lower than September’s by more than 700,000 bpd.
