Oil prices head for second week of gains on China fuel demand outlook

For the week, Brent was heading for a gain of about 1.2% and the U.S. benchmark for a 0.8% rise

oil
Photo: Bloomberg
Reuters LONDON
2 min read Last Updated : Jan 20 2023 | 8:41 PM IST

By Noah Browning

LONDON (Reuters) -Oil rose on Friday and was heading for a second straight weekly gain, spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world's second-biggest economy.

The lifting of COVID-19 restrictions in China is set to increase global demand to a record high this year, the International Energy Agency (IEA) said on Wednesday, a day after OPEC also forecast a Chinese demand rebound in 2023.

Brent crude gained 47 cents, or 0.6%, to $86.63 a barrel by 1431 GMT. U.S. crude advanced 39 cents, or 0.5%, to $80.72.

"Many traders believe it is highly likely that we are going to see higher demand coming from China as it continues to dismantle its COVID policies," said Naeem Aslam, analyst at broker Avatrade.

For the week, Brent was heading for a gain of about 1.2% and the U.S. benchmark for a 0.8% rise.

Oil was also supported by hopes that the U.S. central bank will soon downshift to smaller rises in interest rates and by hopes for the U.S. economic outlook.

A Reuters poll predicted that the U.S. Federal Reserve will end its tightening cycle after increases of 25 basis points at each of its next two policy meetings and is then likely to hold rates steady for at least the rest of the year.

The chances of a "soft landing" for the U.S. economy appear to be growing, Federal Reserve Vice Chair Lael Brainard said on Thursday. The Fed's next rate-setting meeting is over Jan. 31 to Feb. 1.

The two largest economies in the world need more crude, said Edward Moya, senior market analyst at OANDA.

"The oil market has been down on global recession fears, but it is still showing signs it can remain tight a little while longer," he said.

Oil rose despite U.S. inventory figures this week showing crude stockpiles rose by 8.4 million barrels in the week to Jan. 13 to about 448 million barrels, the highest since June 2021.

(Reporting by Alex Lawler; additional reporting by Sudarshan Varadhan and Arathy Somasekhar; editing by David Goodman, Jason Neely and Louise Heavens)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :Oil PricesCrude Oil

First Published: Jan 20 2023 | 8:41 PM IST

Next Story