Dubai: Oil headed for a weekly gain, rebounding from a weak start to the year, on China’s improving demand outlook and as US inflation cooled.
West Texas Intermediate was steady near $78 a barrel, up around 6 per cent for the week. China ramped up purchases of crude this week after Beijing issued new import quota, and consumption is poised to surge to a record this year following the nation’s dismantling of Covid Zero.
US consumer prices in December posted the first monthly decline since 2020, fueling expectations that the Federal Reserve will slow the pace of interest-rate hikes, and adding some bullish sentiment across financial markets.
Oil has pushed higher after a rocky start to the year, with a raft of forecasters from Goldman Sachs Group Inc. to top hedge fund manager Pierre Andurand predicting prices will rally back above $100 a barrel in 2023. There are also tentative signs that trading activity has picked up in the new year.
“Markets are upbeat on what China is doing at the margin, but I don’t think everyone is sold on the roaring economy thesis,” said Vishnu Varathan, the Asia head of economics and strategy at Mizuho Bank Ltd. “Although a pullback from recession risks has given oil some breathing space, if prices rise too much, that could quickly scratch off the demand-side support.”