Dubai: Oil gained as traders looked to a revival in Chinese demand this year after data showed the economy fared better than expected last quarter.
Global benchmark Brent climbed 1.8 per cent, trading near $86 a barrel. China’s economy grew more than anticipated in the fourth quarter as virus curbs swiftly ended, data from Beijing showed. That looks set to bolster traders’ expectations for higher energy consumption this year.
Ahead of the data, Goldman Sachs Group reiterated its case for higher crude prices, arguing that Western economies would avoid recession, aiding consumption, just as Chinese demand improves and Russian supply drops. Hopes for a recovery in Chinese activity have also spurred a boost in futures activity, bucking a months-long trend of waning liqudity.
“The underlying sentiment remains confident as the Chinese economy is opening up,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. “A considerable demand boost for transportation fuel, especially for jet fuel, is anticipated when the Lunar New Year begins on Sunday.”
Crude has had a rocky start to 2023, sinking in the opening week on concerns over a global slowdown, before rebounding. Aside from China, oil has found support from a weakening dollar and growing expectations that the Federal Reserve is nearing an end to its aggressive series of interest-rate hikes.
OPEC expects global oil supply and demand to be in balance in the first quarter, according to a report from the group’s Vienna-based secretariat. Secretary-General Haitham Al Ghais said in a Bloomberg TV interview that he’s “cautiously optimistic” about the global economy.