Oil steadies amid China demand hopes, caution ahead of U.S. inflation data
LONDON — Oil steadied on Thursday as optimism over China’s demand outlook was tempered by caution over whether upcoming inflation data from the United States will point to a slower increase in interest rates.
Top oil importer China is reopening its economy after the end of strict COVID-19 curbs, boosting optimism that demand for fuel will grow in 2023.
Brent crude rose 37 cents, or 0.5%, to $83.04 a barrel at 0912 GMT, while U.S. West Texas Intermediate crude gained 5 cents to $77.46. Both benchmarks rose 3% on Wednesday driven by optimism about the global economy.
“A softer landing for the U.S., and perhaps elsewhere, combined with a strong economic rebound in China following the current COVID wave could make for a much better year than feared and stimulate extra crude demand,” said Craig Erlam of brokerage OANDA.
The U.S. CPI data due at 1330 GMT is set to have a big impact on oil and the wider market by shaping expectations of the speed of interest rate hikes in the world’s biggest economy.
Economists expect the rise in core U.S. consumer prices to slow to an annual pace of 5.7% in December, versus 6% a month earlier. Month-on-month headline inflation is seen at zero.
“The mood is unreservedly upbeat but let us remember: it can turn sour as quickly as it has improved if inflationary pressure proves entrenched,” said Tamas Varga of oil broker PVM.
The market is also bracing for an additional curb on Russian supply due to sanctions over its invasion of Ukraine.
The U.S. Energy Information Administration said the upcoming EU ban on seaborne imports of petroleum products from Russia on Feb. 5 could be more disruptive than the EU ban on seaborne imports of crude oil from Russia implemented in December 2022. (Additional reporting by Laura Sanicola and Emily Chow; editing by Jason Neely)
Comments are closed.