Oil prices rise to $88 a barrel on back of stronger China outlook

Last week Brent rose 2.8%, while the U.S. benchmark logged a 1.8% gain

Reuters LONDON
Russian Oil, crude oil, oil, oil prices

Photo: Bloomberg

By Ron Bousso

LONDON (Reuters) -Oil prices rose on Monday to $88 a barrel, extending last week's gains on the back of a stronger outlook due to an expected economic recovery in top oil importer China this year.

Brent crude was up 42 cents, or 0.48%, to $88.05 at 1025 GMT, while West Texas Intermediate (WTI) U.S. crude rose 33 cents, or 0.4%, to $81.97 a barrel.

Last week Brent rose 2.8%, while the U.S. benchmark logged a 1.8% gain.

Asian trading was slower due to the Lunar New Year holiday, but analysts said that optimism regarding China's reopening will likely drive oil prices higher.

Sukrit Vijayakar, director of energy consultancy Trifecta in Mumbai, said the market wants to preserve long positions in case China growth resumes.

Also Read

Centre aims to boost refining capacity as fuel demand continues to rise

Why are fuel prices at pumps not going down?

Fuel demand in India hits eight-month peak in November amid festivals

Opec+ to cut crude oil output by 100k barrels per day from October

Analysts expect fuel prices to go up if global prices rise further

World shares inch higher, many Asian markets closed for Lunar New Year

Oil prices fall in early trade but remain buoyed by China outlook

China reopening spurs record inflows into emerging market funds: BofA

Oil prices head for second week of gains on China fuel demand outlook

Oil prices set for second week of gains on brighter China outlook

Data shows a solid pick-up in travel in China after COVID-19 curbs were eased, ANZ commodity analysts said in a note, pointing to a 22% jump in road traffic congestion so far this month versus a year earlier in the country's 15 key cities.

International Energy Agency head Fatih Birol on Friday said energy markets could tighten this year if the Chinese economy rebounds the way financial institutions expect.

"I wouldn't be too relaxed about the markets, and 2023 may well be a year where we see tighter markets than some colleagues may think," Birol told Reuters, speaking on the sidelines of the World Economic Forum annual meeting in Davos.

The jump in China's traffic ahead of the Lunar New Year holiday bodes well for fuel demand after the two-week vacation.

"The expected surge in demand comes as the market braces for further sanctions on Russian oil," ANZ analysts said.

The European Union and Group of Seven (G7) coalition will cap prices of Russian refined products starting on Feb. 5, in addition to their price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.

The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to give time to assess the impact of the oil products price cap.

(Additional reporting by Mohi Narayan in New Delhi and Sonali Paul in Melbourne; editing by Kenneth Maxwell and Jason Neely)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Jan 23 2023 | 4:49 PM IST

Explore News