Oil to close week with growth amid rising demand in Asia
2023.03.03 03:13
Oil to close week with growth amid rising demand in Asia
By Tiffany Smith
Budrigannews.com – Oil prices fell on Friday, but they were poised for a gain for the week as renewed optimism regarding the recovery of China’s demand outweighed concerns about a recession caused by rising crude inventories in the United States and tightening monetary policy in Europe.
At 0412 GMT, futures dropped 31 cents, or 0.4%, to $84.44 a barrel. WTI crude futures in the United States were down 29 cents, or 0.4%, to $77.87 a barrel.
Oil prices fell because inflation in the euro zone fell less than expected last month, which raised hopes that the European Central Bank (ECB) would raise interest rates again.
On Thursday, ECB President Christine Lagard said that the central bank still wants to raise rates on March 16 by half a percentage point. Markets are also anticipating a 50 basis point increase in May. Brent is up about 1.5% this week, on track for a second week of gains, and WTI is up about 2%, rebounding from a small loss the week before on hopes of strong fuel demand growth in China, the world’s largest oil importer.
Analysts from Haitong Futures stated, “Positive signs from the demand side have improved the market sentiment, allowing oil to withstand the pressures from strong dollar following the robust U.S. labor data.”
After rising by 0.5% on Thursday, the dropped slightly on Friday as data showed that the number of Americans filing new claims for unemployment benefits decreased once more last week.
Oil becomes more expensive for holders of other currencies when the dollar strengthens.
A private sector survey revealed on Friday that in China, activity in the services sector expanded at the fastest rate in six months in February as customer demand was revived by the removal of stringent COVID-19 restrictions.
Expectations of a recovery in fuel demand were bolstered by the fact that manufacturing activity in China expanded last month at the fastest rate in more than a decade. This month, China’s seaborne imports of Russian oil are expected to reach a record high.
As record exports of kept the build smaller than in previous weeks, the market ignored a tenth consecutive week of crude stock builds in the United States.
Oil prices rose as a result of Russia’s plan to increase export restrictions on oil in March by up to 25% from February’s level.
Analysts from ANZ Daniel Hynes and Soni Kumari wrote on Friday that “a modest supply growth from the U.S., retreating Russian supplies and strong demand should pave the way for higher oil prices in the H2 2023.”
