Oil bounces back on positive data from China
London — Oil rose almost 1% on Wednesday after hitting a three-month low in the previous session as Chinese economic news bolstered hopes for a recovery in demand and concern of a fresh financial crisis eased.
Economic activity in China — the world’s biggest importer of crude — picked up in the first two months of 2023, according to official data released on Wednesday, as consumption and infrastructure investment drove recovery after the country ended strict Covid-19 containment measures.
“Oil prices are regaining ground this morning as traders cheer a flurry of positive macro data out of China,” said Stephen Brennock of oil broker PVM.
Brent crude climbed 54c, or 0.7%, to $79.99 a barrel by 9.15am GMT. West Texas Intermediate gained 76c, or 1.1%, to $72.09.
Both benchmarks shed more than 4% to a three-month low on Tuesday, pressured by fears that the collapse of Silicon Valley Bank (SVB) last week and other US bank failures could spark a new financial crisis.
Those fears were easing on Wednesday, analysts said. US inflation data that was in line with expectations, which increased bets that the Federal Reserve would implement a smaller rate hike at its meeting next week, also boosted sentiment.
“Investors and traders are feeling more at ease today,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
On Wednesday, the latest monthly report from the International Energy Agency flagged a boost to oil demand from China, while a day earlier Opec increased its Chinese demand forecast for 2023.
Investors are waiting for official US inventory data later on Wednesday to see if it confirms Tuesday report by industry group the American Petroleum Institute that shows crude stocks rose by 1.2-million barrels.