Oil prices fluctuate amid weak Chinese economic data

Oil prices fluctuate amid weak Chinese economic data

Oil prices were mixed on Tuesday after China reported its slowest annual economic growth in nearly half a century, with the country’s late-2022 U-turn in COVID-19 policy underpinning hopes of a recovery in fuel demand this year.

Brent crude futures rose 7 cents, or 0.1%, to $84.52 by 0727 GMT, recouping some of the previous session’s 1% loss.

West Texas Intermediate (WTI) crude futures in the United States fell 73 cents, or 0.9%, to $79.15 from Friday’s close. Because of the Martin Luther King Day public holiday in the United States, there was no settlement on Monday.

“Brent crude has gained nearly 10% in the last ten days, boosted by optimism about China’s reopening. The outlook for the rest of the global economy, on the other hand, is uncertain “In a client note, ANZ commodities analysts stated.

According to ANZ, a surge in Russian crude supply is also weighing on the market, with seaborne exports reaching 3.8 million barrels per day last week, the highest level since April.

China’s GDP expanded by 3% in 2022, falling short of the official target of “around 5.5%” and marking the second-worst performance since 1976, as the final quarter was hampered by strict COVID curbs and a property market slump.

Despite the poor economic data, analysts predicted that Beijing’s December rollback of its zero-COVID policy would boost consumption.

Data released on Tuesday also showed China’s oil refinery output in 2022 had fallen 3.4% from a year earlier, its first annual decline since 2001, although daily December oil throughput rose to the second-highest level of 2022.

The estimate for GDP growth in 2023 has improved compared to prior outlook, according to ING Chief Economist, Greater China Iris Pang. “With a stronger conclusion to 2022 than we had expected, as well as hints of greater retail expenditure ahead,” she wrote in a note.

Pang cautioned that China still had to contend with significant challenges, such as the likelihood of this year’s recessions in the United States and Europe.

In a pessimistic study issued at the annual World Economic Forum in Davos, two-thirds of private and public sector analysts questioned projected a worldwide recession this year, with approximately 18% believing it “very likely”.

PwC’s survey of chief executives’ attitudes was the most pessimistic since the firm began conducting the poll a decade ago.

The dollar’s recovery from seven-month lows has weighed on oil prices, as a stronger greenback makes oil more expensive for those holding other currencies.

Source: Energy Ghana

 

 

 

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