Optimism over China demand sets oil on track for strong weekly gain
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OIL prices rose on Friday (Jan 13) and were on track to make a weekly gain of more than 7 per cent. Markets cheered over solid signs of demand growth in top oil importer China, and expectations of less aggressive interest-rate hikes in the United States.
Brent crude futures rose by 53 US cents, or 0.6 per cent, to US$84.56 a barrel by 10.27 am GMT. West Texas Intermediate (WTI) crude futures gained 55 US cents, or 0.7 per cent, to stand at US$78.94 per barrel.
Brent has jumped 7.6 per cent this week and WTI was up 7 per cent, recouping most of the losses in the previous week.
Analysts said that recent Chinese crude purchases and a pick-up in road traffic have fuelled confidence in demand recovery in the world’s second-largest economy, following the reopening of its borders and the easing of its Covid-19 curbs last year.
ANZ analysts noted that, in another encouraging sign, a congestion index covering the 15 Chinese cities with the largest number of vehicle registrations had risen 31 per cent from a week earlier.
“Gains are pencilled in as traders look ahead to a further drop in Russian supply and the normalisation in China’s fuel demand,” PVM oil analyst Stephen Brennock said.
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“Before then, however, renewed bouts of selling cannot be discounted, given the current looseness of the oil balance.”
Oil prices have also been buoyed by a slide in the US dollar to a nine-month low, after data showing that US inflation fell for the first time in two-and-a-half years was released. This has reinforced expectations that the Federal Reserve would slow the pace of rate hikes.
A weaker greenback tends to boost demand for oil, as it makes the commodity cheaper for buyers holding other currencies. REUTERS
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