Oil Rises as Chinese Data Boost Demand Outlook

By Adedapo Adesanya

Oil settled higher on Monday, reversing losses as investors grew optimistic that holiday travel in China would boost fuel demand in the world’s largest oil importer.

Brent crude went up by $1.07 or 1.3 per cent to close at $82.73 per barrel, while the US West Texas Intermediate (WTI) crude moved up by 89 cents or 1.1 per cent to trade at $78.76 per barrel.

Last week, both contracts fell more than 5 per cent for their first weekly declines.

Now, the market has looked to China, with the largest economy still not as strong after it removed curbs that clouded the oil demand outlook.

Chinese customs data on Friday showed record volumes of imports in March.

On Monday, data showed that bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries.

Overseas tour bookings for the upcoming holiday, for which many in China are off from April 29 until May 3, are up 157 per cent from the beginning of April, according to the country’s largest online travel firm, Ctrip.

However, the numbers remain far off pre-COVID-19 levels, with long-haul airfares soaring and not enough flights available.

Support also came from supply tightness owing to additional supply cuts planned by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ producer group from May could also lift prices.

Earlier this month, Saudi Arabia and other OPEC+ oil producers announced further oil output cuts of around 1.16 million barrels per day, in a surprise move that brought cuts to 3.66 million barrels per day or about 3.7 per cent of global demand.

Iraq’s northern oil exports also showed slow signs of an imminent restart after a month of standstill, as aspects of an agreement between the OPEC member and the Kurdistan Regional Government (KRG) have yet to be resolved, according to a report by Reuters.

In its latest commodities report, Saxo Bank said that renewed weakness in the oil markets during the second half of the current month was driven by soft US economic data.

However, Saxo believes Brent will hold in the $80/barrel region for the near future, with demand set to pick up during the second half of 2023.