Oil prices were mixed Tuesday after China reported its weakest economic growth in nearly 50 years. However, expectations of a recovery in fuel demand this year were bolstered by the country’s U-turn in its COVID policy toward the end of 2022.
Brent crude futures rose 16 cents, or 0.2 percent, to $84.62 at 0414 GMT, making up some of the 1% loss from the previous session.
US West Texas Intermediate (WTI) crude futures decreased by 60 cents, or 0.8%, to $79.26 from Friday’s close. There was no agreement because Monday was Martin Luther King Day in the United States.
“Over the past ten days, Brent crude has gained nearly 10% as optimism over China’s reopening boosted sentiment. Nevertheless, ANZ commodity analysts wrote in a client note that “the outlook for the rest of the global economy is uncertain.”
According to ANZ, seaborne exports reached 3.8 million barrels per day last week, the highest level since April. This increased supply of Russian crude put additional pressure on the market.
China’s gross domestic product expanded by 3 percentage points in 2022, exceeding the official target of “around 5.5 percentage points” and marking the second-worst performance since 1976. The final quarter was severely impacted by stringent Covid curbs and a slump in the property market.
Analysts outperformed them despite the poor economic data, as consumption increased after Beijing reversed its zero-Covid policy in December.
According to data released on Tuesday, China’s oil refinery output in 2022 decreased by 3.4% from the previous year, marking the first annual decline since 2001. However, daily oil throughput reached its second-highest level since 2022 in December.
In a note, ING bank’s chief economist for Greater China, Iris Peng, said that “a stronger end to 2022 than we had expected, plus indications of stronger retail expenditure ahead” had improved “the outlook for GDP growth in 2023 compared to our prior outlook.”
But Peng said that China still had a lot of problems, like the possibility of recessions this year in Europe and the United States.
In a bearish survey that was presented at the annual Davos summit, two-thirds of private and public sector economists polled anticipated a global recession this year, with approximately 18 percent considering it to be “extremely likely.”
Likewise, the survey of chief executive opinions conducted by PwC was the most negative since the poll’s inception a decade ago.
A rise in the dollar from its seven-month lows is also having an effect on oil prices because a stronger dollar makes oil more expensive for people who hold other currencies.