Brent set for weekly gain on market optimism over a Chinese recovery
Front-month ICE Brent has inched $0.25/bbl higher on the day, to $84.70/bbl at 09.00 GMT, and the futures contract is heading for a 2% increase over its settlement level last week amid a higher prospect of stronger Chinese oil demand.
PHOTO: China oil. Getty Images
Upward pressure:
Signs of a Chinese oil demand recovery has contributed to boost Brent prices this week. After digesting positive Chinese manufacturing activity data for February, the oil market awaits for further signals of revival Chinese demand. The Chinese annual parliament meeting is scheduled for this weekend and is likely to provide more clarity on demand prospects.
The Chinese government is expected to announce its economic growth target for this year, along with measures to boost economic growth, Reuters reported yesterday. President Xi Jinping is likely to announce a growth target of more than 5% for this year, according to local media reports. The country’s GDP grew by a modest 3% in 2022 as extensive Covid-19 restrictions sapped economic activity and dented oil demand.
Downward pressure:
According to a Bloomberg survey, the core OPEC group produced 29.24 million b/d of crude in February, up by 120,000 b/d from January’s output. The rise was primarily due to a rebound in Nigerian crude production. Based on this survey, the Nigerian crude output rose to a yearly high of 1.44 million b/d in February, while production from other core members remained steady.
US Federal Reserve’s Boston president Susan M. Collins has urged that the central bank should continue raising its key interest rate in order to control rising inflation levels. Also this week, the Federal Reserve’s Atlanta president Raphael Bostic president issued a similar statement in which he advocated for more interest rate hikes. Hawkish comments from central bank officials have bolstered concerns of further rate hikes.
By Nithin Chandran
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