Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices settle higher on hopes of China demand rebound

Published 01/16/2023, 08:46 PM
Updated 01/17/2023, 03:26 PM
© Reuters. A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

© Reuters. A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

By Laura Sanicola

(Reuters) -Oil prices settled higher on Tuesday in choppy trading after China posted weak but expectation-beating annual economic growth data and on hopes that a recent shift in its COVID-19 policy will boost fuel demand.

Brent crude futures settled up $1.46, or 1.7%, to $85.92 while U.S. West Texas Intermediate (WTI) crude settled up 32 cents, or 0.4%, at $80.18. There was no settlement on Monday because of a U.S. public holiday for Martin Luther King Day.

China's gross domestic product expanded 3% in 2022, missing the official target of "around 5.5%" and marking the second-worst performance since 1976. But the data still beat analysts' forecasts after China rolled back its zero-COVID policy in December.

"China is making the best out of their economic data, and it's fair to say it could have been worse," said Bob Yawger, director of energy futures at Mizuho.

However, New York state manufacturing contracted sharply in January as orders collapsed and employment growth stalled, and little improvement was expected over the next six months, according to a Tuesday Federal Reserve survey.

"The question is how does the Federal Reserve respond to such a mixed bag of economic performance," said John Kilduff, partner at Again Capital LLC in New York.

Oil was bolstered by a weaker U.S. dollar, which fell against most major currencies on Tuesday due to expectations of a possible Bank of Japan policy shift that could be a precursor to adopting a tighter monetary policy.

A weakening dollar makes greenback-denominated oil less expensive for other currency holders.

Data released on Tuesday showed China's oil refinery output in 2022 had fallen 3.4% from a year earlier for its first annual decline since 2001, though daily December oil throughput rose to the second-highest level of 2022.

"The country's crude oil imports were up 4% in December and a considerable demand boost for transportation fuel ... is anticipated when the Lunar New Year begins on Sunday," said PVM analyst Tamas Varga.

The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that Chinese oil demand would grow 510,000 barrels per day this year, while it kept its 2023 global demand growth forecast unchanged at 2.22 million bpd.

A monthly report from the International Energy Agency (IEA) on Wednesday will shed more light on the strength of oil demand while recession fears loom.

© Reuters. A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

In a survey released at the annual World Economic Forum in Davos, two thirds of private and public sector economists polled expected a global recession this year.

A survey of chief executives' views by PwC was the gloomiest since the poll was launched a decade ago.

Latest comments

Wind power offshore projects being blamed for sudden rise in dead whales rolling up on beaches. How many whales must die?
dont we love freedom of speech.... freedom to lie... freedom to mislead...
China demand will push commodity prices up. Will support inflation.
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.