Brent soars past $85/bbl as China's demand recovery remains in spotlight
Front-month ICE Brent has climbed up by $1.46/bbl on the day, to $86.41/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent has been rising steadily in anticipation of a resurgence of Chinese demand and tightening supply. The travel surges during China's Spring Festival week are expected to raise its oil demand. However, Russian oil production is expected to drop after EU sanctions on refined Russian oil products take effect on 5 February.
OPEC has maintained its global oil demand forecast for the second straight month following signs of demand recovery in China. According to the oil producers' group, oil demand will rise by 2.2 million b/d to 101.8 million b/d this year.
In an interview with Bloomberg TV, OPEC Secretary General Haitham Al Ghais stated that he is “cautiously optimistic” about the global economy. Speaking on the sidelines of the World Economic Forum in Davos, Ghais said he is "seeing green" in the global economy and expects China's oil demand to rise by 500,000 b/d.
OPEC also expects Russia’s liquid fuel output to decline by 850,000 b/d in 2023, to 10.1 million b/d amid "high uncertainty.”
A weaker US Dollar and growing expectations of central banks ending aggressive rate hikes are also supporting Brent, says ANZ commodity strategist Daniel Hynes.
Downward pressure:
Meanwhile, recession remains a concern in the background as two-thirds of chief economists surveyed by the World Economic Forum believe a global recession is likely this year, with almost 18% saying it is "extremely likely."
“Although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy,” the survey report said.
Speaking to CNBC at the World Economic Forum’s annual conference, Kristalina Georgieva, managing director of the International Monetary Fund, warned that global growth will slow down in 2023.
By Konica Bhatt
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