Adedapo Adesanya
By Adedapo Adesanya
Oil settled up about $1 a barrel on Friday as China’s economic prospects brightened, boosting expectations for fuel demand in the world’s second-biggest economy.
Brent crude settled at $87.63 a barrel after it grew by $1.47 or 1.7 per cent, while the United States crude settled at $81.31 a barrel, as it gained 98 cents or 1.2 per cent.
The benchmarks notched a second straight weekly gain as a result. For the week, Brent logged a 2.8 per cent increase, and the US benchmark saw a 1.8 per cent rise.
China, which has become the latest mover of the oil market, continued its bullish contribution to the market, with the latest coming from the International Energy Agency (IEA) saying that the lifting of COVID-19 restrictions in China is set to boost global oil demand this year to a new record high.
Despite possible but likely mild recessions in Europe and the United States, China’s expected reopening is set to fuel rebounds in nearby Asian economies and see it take the lead from India as the world’s leader in oil demand growth.
On its part, the Organisation of the Petroleum Exporting Countries (OPEC) said Chinese oil demand would rebound this year due to the relaxation of the country’s COVID-19 curbs and drive global growth, and sounded an optimistic note on the prospects for the world economy in 2023.
This is as world demand in 2023 will rise by 2.22 million barrels per day or 2.2 per cent.
OPEC expects Chinese demand to grow by 510,000 barrels per day in 2023. Last year, the country’s oil use posted its first contraction in years due to the COVID containment measures.
Oil was also supported by hopes that the US Federal Reserve will soon downshift to smaller interest rate hikes, which could brighten the US economic outlook.
Predictions showed that the US central bank will end its tightening cycle after increases of 25 basis points at each of its next two policy meetings and should then hold rates steady for at least the rest of the year.
Also helping oil prices, Baker Hughes Co said the US oil rig count fell 10 to 613, its lowest since November.
Oil rose despite US inventory figures this week showing crude stockpiles rose by 8.4 million barrels in the week to January 13 to about 448 million barrels, the highest since June 2021.
Analysts also said a price cap on Russian oil, which has been rippling through the global market, is helping to boost crude prices.
