Oil rises on economic hopes from China
2023.01.13 02:32
Oil rises on economic hopes from China
By Ray Johnson
Budrigannews.com – On solid signs of demand growth in China, the top crude-oil importer, and expectations of less aggressive interest rate increases in the United States, oil prices were on track for gains of more than 6% for the week, despite a decline in early Friday trade.
By 0322 GMT, futures were down 33 cents, or 0.4 percent, to $83.70 a barrel, and WTI crude futures were down 20 cents, or 0.3 percent, to $78.19.
This week, Brent has gained 6.7%, while WTI has gained 6.2 percent, making up most of the losses from last week.
Following the reopening of its borders and the easing of COVID-19 curbs following protests last year, analysts said that confidence in a demand recovery in the world’s second-largest economy was fueled by recent Chinese crude purchases and a pick-up in road traffic.
In a client note, RBC commodity strategist Michael Tran stated, “Given the focus on energy security, we anticipate that Chinese imports will continue to pick up, particularly as refinery runs ramp up and stockpiling crude remains a strategic priority.”
Another encouraging sign was the 31% increase in the congestion index for the 15 Chinese cities with the most vehicle registrations from a week earlier, according to ANZ analysts.
After data showed that U.S. inflation fell for the first time in two and a half years, expectations were reinforced that the Federal Reserve would slow the pace of rate hikes, which has boosted oil prices. The dollar’s fall to a nearly nine-month low has also helped.
Because it makes the commodity more affordable for buyers who hold other currencies, a weaker greenback tends to boost demand for oil.
However, according to Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:), some of the week’s gains will likely fade in Asian trade. Insights.
According to Hari, “Crude is in for a correction, even if it is a modest one.” “The past two sessions were almost entirely driven by renewed Fed pivot hopes, which, going by the experience of the past quarter, tend to be a phenomenon that tends to be a short-lived phenomenon.”
More Oil prices are stable due to weak dollar
