Oil prices increase due to China expectations of demand US inflation on the agenda.
Oil gained about one cent on the day, aided by optimism about China’s demand outlook , and hope that the upcoming inflation data in the United States will point to slowing growth in interest rates.
The world’s largest crude importer China is now reopening its market after the end of the strict COVID-19 restrictions, which has boosted optimism that demand for gasoline will rise in 2023.
Brent crude gained 90 cents (or 1.1 percent in the last hour, rising to $83.58 at 1100 GMT and U.S. West Texas Intermediate crude gained 74 cents about 1 percent and climbed to $78.15. Both benchmarks increased by 3 percent on Wednesday, driven by optimism that the economic outlook for the world might not be as negative as previously believed.
“A less turbulent coming for the U.S., and perhaps elsewhere, paired with a robust economic recovery in China in the wake of the recent COVID wave could lead to an even better year than anticipated, and could spur more demand for crude oil,” said Craig Erlam of the brokerage OANDA.
Oil rises on China demand hopes, U.S. inflation in focus : Reuters
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It is expected that the U.S. CPI data due at 1330 GMT will be a major influencer on oil prices and the global market as it will shape expectations of the pace of rate hikes in the world’s most populous economy.
“The general mood is overwhelmingly positive however, we should remember that it could turn bad in the same way it has improved in the event that inflationary pressure becomes a problem,” said Tamas Varga from the oil broker PVM.
Economic analysts expect the growth in the core U.S. consumer prices to slow to a rate of 5.7 percent in December, as opposed to 6 percent a month earlier. Month-on-month headline inflation is seen at zero.
Markets are also preparing for another cut in Russian oil supplies due to sanctions related to the Russian aggression in Ukraine.
The U.S. The Energy Information Administration stated that the forthcoming EU ban on the import of oil products and petroleum from Russia in February. 5 may cause more disruption than the EU ban on imports by sea of oil products from Russia that was implemented in December 2022.