Oil Extends Decline Ahead of Chinese GDP Data and OPEC Outlook

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(Bloomberg) — Oil dropped as investors waited for data on China’s economy and a market outlook from the Organization of Petroleum Exporting Countries that may yield clues about supply and demand in 2023.

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Global benchmark Brent fell toward $84 a barrel after shedding 1% on Monday. Beijing is due to release fourth-quarter economic growth data. The figures are expected to show a marked slowdown even as most traders look ahead to a likely rebound in energy demand following the dismantling of virus curbs.

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In addition to the backward-looking data from China, OPEC is scheduled to release its monthly analysis of the global oil market. The wider 23-nation OPEC+ group agreed to collectively reduce supplies by 2 million barrels a day from November, and then hold steady for the rest of this year. 

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 growing expectations that the Federal Reserve is nearing an end to its aggressive series of interest-rate hikes and a weakening dollar.

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In a typically bullish note, Goldman Sachs Group Inc. reiterated its case for higher crude prices in 2023, arguing that Western economies would avoid recession, aiding consumption, just as Chinese demand improves and Russian supply drops. Commodity markets are now pricing in a recession “that we don’t believe is going to materialize,” the bank said in a note dated Jan. 16.

Russia’s seaborne crude exports soared last week to the highest level since April, suggesting that it has — for now — overcome an initial hit to flows that followed European sanctions. Still, falling oil prices have meant the Kremlin’s crude revenues are coming under further pressure.

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