Oil prices rose slightly on Tuesday, after being down 2% in the previous session, as strong economic data from China, the world’s largest importer of crude oil, bolstered the demand outlook.
Brent crude climbed 34 cents at 0618 GMT to $85.10 a barrel, while West Texas Intermediate (WTI) rose 29 cents to $81.12 a barrel.
According to official data, the Chinese economy grew faster than expected in the first quarter and expanded 4.5% year-on-year as policymakers took action to support growth after the end of strict COVID-19 restrictions in December.
The Chinese economy grew faster than expected in the first quarter. May is the peak season for seasonal travel in China, and fuel demand is expected to see a huge year-over-year increase.
Chinese refinery output rose to record highs in March, signaling strong fuel demand, as refineries accelerated their performance to capture strong export demand and build inventory ahead of scheduled maintenance.
The International Energy Agency (IEA) predicts that China will account for most of the global 2023 crude oil demand growth.
However, the agency also warns that output cuts announced by OPEC+ producers risk exacerbating the expected supply gap in the second half of the year and could hurt consumers and hamper the global economic recovery.
The US dollar is strengthening alongside interest rate hikes, and traders are betting that the US Federal Reserve will raise the lending rate again in May, which could dampen hopes for an economic recovery. Oil prices remain under pressure as the dollar strengthens and treasury yields rise.
A stronger dollar makes dollar-priced commodities more expensive for buyers holding other currencies.
U.S. crude and natural gas production in the country’s seven largest shale basins is expected to hit a record high in May, marking some increase in supply on that front, data from the Energy Information Administration (EIA) released on Monday.
Data on US crude inventories will be released by API on Tuesday and EIA on Wednesday. A preliminary survey on Monday shows U.S. crude inventories fell by nearly 2.5 million barrels last week.
The fluctuating oil market may soon have to deal with recession fears.
