Oil rises for 2nd week as China’s prospects improve

(Quotes updated, details added, quote)

Jan 20 (Reuters) – Oil prices held higher on Friday and are poised to rise for a second week in a row, thanks in large part to improved economic forecasts in China, which is expected to boost fuel demand.

Futures for Brent crude by 16:09 Moscow time rose by 0.6% to $86.68 per barrel, WTI rose by 0.68% to $80.88 per barrel.

Lifting coronavirus restrictions in China will push global demand to record highs this year, the International Energy Agency said on Wednesday.

On Tuesday, OPEC said that China’s oil consumption will recover this year thanks to the lifting of anti-COVID restrictions and will stimulate global growth.

“Many traders see high demand from China as highly likely as the epidemiological restrictions are lifted,” said Naeem Aslam of Avatrade.

Oil quotes also supported hopes that the US central bank will soon move to slow down the pace of monetary policy tightening, as well as hopes for the US economic outlook.

The Reuters poll showed that the US Federal Reserve will end the tightening cycle after raising rates by 25 basis points at each of the next two meetings, and then likely keep rates unchanged, at least until the end of the year. New York Fed chief John Williams said on Thursday that the US central bank is seeing signs of cooling inflationary pressures from soaring rates.

Oil demand in China rose to its highest level since February in November, data from the Joint Institutions Data Initiative (IODI) showed on Thursday. On Tuesday, OPEC said that China’s oil consumption will recover this year thanks to the lifting of anti-COVID restrictions and will stimulate global growth.

“The world’s two largest economies need more oil. The oil market fell due to fears of a global recession, but it continues to show signs that it is likely to remain tight for some time to come,” said Edward Moya of OANDA.

The head of the International Energy Agency (IEA), Fatih Birol, said on Thursday that oil exports from Russia will continue to decline in the first quarter of the year and beyond.

The original message in English is available at the code: (Sudarshan Varadhan with the participation of Arati Somasekhar, translated by Tomas Kanik)

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