April 18, 2023 (MLN): Oil prices inched up slightly in the early trading session on Tuesday supported by China’s robust economic data, after falling by 2% in the previous session.
Strong economic data from China, the world's largest crude importer, has underpinned the demand outlook.
Brent crude rose by 0.29% to $85.01 a barrel, while U.S. West Texas Intermediate (WTI) climbed by 0.27% to $81.06 per barrel.
China's economy grew at a faster-than-expected rate in the first quarter, expanding by 4.5% YoY as policymakers sought to bolster growth following the end of strict COVID-19 curbs in December.
The remarkable recovery of the Chinese economy has supported the recent rebound in oil prices, according to CMC Markets analyst Leon Li, as reported by Reuters.
Furthermore, with May being the seasonal peak travel period in China, demand for fuel is expected to post a significant YoY increase.
Chinese refinery throughput surged to record levels in March, indicating robust demand for fuel. Refiners stepped up runs to capture strong export demand and build inventories ahead of planned maintenance.
The International Energy Agency (IEA) forecasts that China will account for most of 2023 crude oil demand growth. However, it has warned that output cuts announced by OPEC+ producers could exacerbate the supply deficit expected in the second half of the year, which could hurt consumers and global economic recovery.
According to data from the Energy Information Administration, U.S. crude oil and natural gas production in the seven largest shale basins is expected to rise in May to the highest on record. This signals some supply increment on this front.
Markets are now eyeing industry data on U.S. crude inventories, which will be released on Tuesday and Wednesday.
