Dear clients,
Oil prices edged up on Tuesday after falling 2% in the previous session, as stronger economic data from the world’s biggest crude oil importer, China, supported the demand outlook.
Brent rose 34 cents to $85.10 a barrel at 06:18 GMT, while West Texas Intermediate got 29 cents to $81.12 a barrel.
Official data showed that China’s economy grew faster than expected in the first quarter, expanding 4.5% year-on-year as policymakers seek to maintain growth after the end of tough lockdown restrictions in December.
A notable recovery in the Chinese economy has supported the recent rebound in oil prices, analysts said. In addition, May is the seasonal peak travel period in China and fuel demand is expected to increase very strongly year on year.
The International Energy Agency (IEA) predicts that China will account for most of the growth in crude oil demand in 2023.
However, the agency also warned that production cuts announced by OPEC+ producers could exacerbate the supply shortfall expected in the second half of the year and could hurt consumers and slow down the global economic recovery.
Oil prices also remain under pressure from a stronger dollar and rising Treasury yields, analysts at National Australia said in a client note.
The US dollar is strengthening along with rising interest rates, and traders are betting that the US Federal Reserve will raise the lending rate again in May, which could dampen hopes of an economic turnaround.
