By Adedapo Adesanya
Rising Chinese demand saw Brent crude hit its highest level since December as it rose by $1.18 or 1.4 per cent to $86.16 per barrel, while the US West Texas Intermediate (WTI) crude futures improved by 85 cents or 1.1 per cent to settle at $80.33 per barrel.
This happened while the market wrote off a second straight week of large builds in US crude inventories, with Chinese oil demand climbing by nearly 1 million barrels per day from the previous month to 15.41 million barrels per day in November, the highest level since February, according to the latest export figures published by the Joint Organisations Data Initiative.
The data showed that while China showed an uptick, Saudi Arabia witnessed a fall in its export to a five-month low in November, while production also slipped.
The kingdom’s crude exports fell about 6.3 per cent to 7.28 million barrels per day in November from 7.77 million barrels per day in October, marking the first reduction in exports in the last six months.
The world’s largest oil exporter’s crude production fell to 10.47 million barrels per day in November from 10.96 million barrels per day in the previous month.
In its monthly report, the Organisation of the Petroleum Exporting Countries (OPEC) said on Tuesday that Chinese oil demand would rebound this year due to a relaxation of the country’s COVID-19 curbs and drive global growth, and it sounded an optimistic note on the prospects for the world economy in 2023.
The International Energy Agency (IEA), on its part, noted that the energy markets could be tighter in 2023, especially if the Chinese economy rebounds and the Russian oil industry struggles under sanctions.
Support to prices came as there was a weaker US Dollar index, which was headed for a second consecutive weekly decline. A weaker Dollar makes crude, priced in the currency, cheaper for foreign buyers.
Prices came under pressure briefly after the US Energy Information Administration (EIA) data showed US crude stocks last week rose by 8.4 million barrels, their biggest gain since June 2021.
Prices will also sway depending on the fears of a possible US recession.
