Crude Oil Prices Up on Positive US, Chinese Data

By Adedapo Adesanya

Crude oil prices rose more than 1 per cent on Thursday on expectations that global demand will strengthen following signals from the world’s top two economies: the United States and China.

Brent futures increased by $1.35 or 1.6 per cent to settle at $87.47 a barrel, while the US West Texas Intermediate (WTI) crude improved by 86 cents or 1.1 per cent to settle at $81.01 per barrel.

The US economy grew faster than expected in the fourth quarter, but a measure of domestic demand rose at its slowest pace in 2½ years, reflecting higher borrowing costs.

The country’s gross domestic product (GDP) increased at a 2.9 per cent annualized rate last quarter. The economy grew at a 3.2 per cent pace in the third quarter.

The Commerce Department’s advance fourth-quarter report on Thursday showed half of the boost to growth came from a sharp rise in inventory held by businesses, some of which is likely unwanted.

Consumer spending maintained a solid pace of growth, supported by consumption early in the fourth quarter. Retail sales weakened sharply in November and December, and business spending on equipment contracted last quarter, the data showed.

China has been easing stringent COVID-19 restrictions this month, with the country reopening borders for the first time in three years.

Analysts noted that China’s reopening is supporting demand prospects for oil.

Market participants are closely tracking the upcoming JMMC (Joint Ministerial Monitoring Committee) meeting of the Organisation of the Exporting Countries and its allies, OPEC+ and the European Union(EU) embargo on refined products.

The OPEC+ ministerial panel meeting on February 1 is likely to endorse the oil producer group’s current output levels, OPEC+ sources reportedly said.

Prior to this, the US Energy Information Administration (EIA) reported an oil inventory build of 500,000 barrels for the week to January 20.

That was short of forecasts for a 1 million barrel rise, though the EIA says crude stocks are at their highest since June 2021.

The latest change in inventories compared with two sizeable weekly builds—one of 8.4 million barrels for the second week of January and a 19-million-barrel one for the first week of the month.

At 448.5 million barrels, crude oil inventories in the United States are 3 per cent above the five-year average for this time of year.