Singapore, Jan. 18 (BNA): Oil prices rose today, Wednesday, extending the previous session’s gains, driven by optimism that the lifting of strict restrictions imposed by China on Covid-19 will lead to a recovery in fuel demand in the world’s largest oil importer.
Brent crude futures rose 63 cents, or 0.73%, to $86.55 a barrel by 0401 GMT, after rising 1.7% in the previous session, Reuters reports.
US West Texas Intermediate crude futures rose 68 cents, or 0.85%, to $80.56, after rising 0.4% on Tuesday.
China’s economic growth slowed sharply to 3% in 2022, lagging behind the official target of “around 5.5%” and marking the second-worst performance since 1976. But the data still beat analysts’ expectations after China began backing away from its anti-coronavirus policy. in early time. Dec. Analysts polled by Reuters see growth in 2023 rebounding to 4.9%.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that Chinese oil demand will grow by 510,000 barrels per day this year, after contracting for the first time in years in 2022, due to measures to contain the Corona virus.
But OPEC kept its forecast for global demand growth in 2023 unchanged at 2.22 million bpd.
“Hopes are growing that China’s fuel demand will rebound after its recent policy shift on COVID-19 supported oil prices,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co., Ltd.
“OPEC’s optimistic outlook on Chinese demand has also supported market sentiment,” he said, predicting a bullish tone this week.
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The market also received support from expectations of a decrease in US crude stocks by about 1.8 million barrels, despite the rise in oil product stocks, according to a Reuters poll.
On the supply side, oil production from major US shale regions is set to rise by about 77,300 barrels per day (bpd) to a record high of 9.38 million bpd in February, the US Energy Information Administration said in a production report on Tuesday.
Meanwhile, Russia expects Western sanctions to have a significant impact on its oil product exports and production, likely leaving it with more crude oil to sell, said a senior Russian source familiar with the country’s future.
“Potential supply losses from Russia and the reopening of China could quickly tighten the market,” ANZ analysts said in a note to clients.
The market is also watching closely for more demand data from China in the International Energy Agency’s monthly report due later Wednesday, according to ING analysts in a client note.