📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Crude oil soars to two-week high on Chinese growth optimism

Published 01/17/2023, 09:24 AM
Updated 01/17/2023, 09:25 AM
© Reuters.

By Peter Nurse   

Investing.com -- Oil prices rose Tuesday, climbing to their highest levels in two weeks as Chinese economic growth data raised optimism that the country’s reopening from COVID restrictions will trigger a surge of demand this year from the world’s largest crude importer.

By 09:25 ET (14:25 GMT), U.S. crude futures traded 1.3% higher at $81.15 a barrel, while the Brent contract rose 2% to $86.17 a barrel. 

China's gross domestic product expanded 3% in 2022, its second-weakest growth since 1976, and considerably below the official target of “around 5.5%.”

That said, this growth was still above analysts' forecasts, and the economy expanded 2.9% in the final quarter of 2022 from a year ago, helped by Beijing's rolling back of its zero-COVID policy in December.

“Chinese data released overnight was material and very much supports this year's hottest trend that China's zero-Covid reversal will spark resurgent Chinese demand,” said analysts at ING, in a note.

“The December data, in particular, supports the proposition that despite the pick-up in case numbers, the freedom of movement story is positively dominating the Chinese demand story.”

Additionally, China’s Vice Premier Liu He told the World Economic Forum’s annual meeting in Davos, Switzerland, earlier Tuesday that his country’s economy will likely rebound to its pre-pandemic growth trend this year after coronavirus infections passed their peak.

There was also positive economic news from Europe, as the ZEW economic sentiment index for Germany, the Eurozone’s largest economy, swung back into positive territory in January, climbing to its highest level in 11 months.

The Organization of Petroleum Exporting Countries released its monthly report earlier Tuesday, and kept its forecast for oil demand growth unchanged for 2023 at 2.2 million barrels per day, saying the forecast remains surrounded by uncertainties including global economic developments, shifts in COVID-19 containment policies, and geopolitical tensions.

The Secretary General of OPEC, Haitham al-Ghais, said, in an interview at Davos, that the organization will do "whatever it takes" to keep the oil market balanced this year. 

He added that the group is “cautiously optimistic” about the outlook for the world economy, balancing an expected slowdown in western countries against a rebound in demand from China.

The release of U.S. inventory data from the American Petroleum Institute has been pushed back to Wednesday this week owing to the U.S. holiday on Monday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.