Crude Oil Prices Rocket to a Two-week High
As Chinese economic growth statistics bolstered hopes that the country’s reopening from COVID restrictions would cause a rise in demand this year from the world’s top crude importer, crude oil prices climbed on Tuesday, reaching their highest levels in two weeks.
U.S. crude oil prices were 1.3% higher at $81.15 a barrel at 09:25 ET (14:25 GMT), while the Brent contract was up 2% at $86.17 a barrel.
GDP growth in China slowed to 3% in 2022, the second-lowest rate since 1976 and much below the government’s aim of “about 5.5%.”
The economy grew 2.9% in the fourth quarter of 2022 compared to the same period a year earlier, which was better than expected. This was partly due to Beijing’s relaxation of its zero-COVID policy in December.
ING analysts said in a note that the “material Chinese data reported overnight” confirms the “hottest trend of the year” that China’s zero-Covid reversal would drive rebounding Chinese demand.
Despite the rise in reported incidents, “the freedom of movement narrative is favorably dominating the Chinese demand story,” as the December data shows.
China’s Vice Premier Liu He predicted earlier on Tuesday at the World Economic Forum’s annual gathering in Davos, Switzerland, that the Chinese economy will return to its pre-pandemic growth trajectory this year now that the peak of coronavirus infections had passed.
Also on the bright side, the ZEW economic mood index for Germany, the Eurozone’s biggest economy, swung back into positive territory in January, reaching its highest level in 11 months.
In its monthly report released on Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) said it was maintaining its forecast for oil demand growth in 2023 at 2.2 million barrels per day even though the forecast is still shrouded in uncertainty due to factors such as changes in the global economy, variations in COVID-19 containment policies, and geopolitical tensions.
OPEC Secretary General Haitham al-Ghais stated in an interview at Davos that the group will do “everything it takes” to maintain a stable oil market in 2019.
The organization is “cautiously hopeful,” he said, since it is taking into account both the predicted downturn in western nations and the rise in demand from China.
Because of the Monday holiday in the United States, this week’s publication of U.S. inventory statistics from the American Petroleum Institute has been returned to Wednesday.
Featured Image: Freepik @ user8315145