Oil prices rose nearly 2% on Tuesday. It erases the previous session’s losses as hopes for a strong economic rebound in China offset worries about U.S. interest rate hikes. It is dragging down consumption in the world’s biggest economy. Here is how oil rebounds
Brent crude futures for April, which expired on Tuesday, settled higher by $1.44, or 1.8%, at $83.89 a barrel. The more active May contract rose $1.41, or 1.7%, to $83.45.
U.S. West Texas Intermediate (WTI) crude futures gained $1.37, or 1.8%, to $77.05 a barrel.
“We’re getting to a point where we’re seeing some short-covering. It is because it’s the end of the month,” said Price Group analyst Phil Flynn.
For the month of February, Brent fell about 0.7%, while WTI dropped about 2.5%.
Expectations of demand recovery in China underpinned gains, with the market awaiting key data over the next two days. Economists polled by Reuters expected that factory activity in the world’s second-largest economy grew in February.
“China’s economic recovery will drive its demand for commodities higher, with oil positioned to benefit the most,” JPMorgan analysts said in a client note.
Urals crude exports to China from Russia’s Western ports rose in February from the previous month, on lower freight costs and rising demand, Reuters sources said.
Oil prices are expected to rise above $90 a barrel toward the second half of 2023 as Chinese demand recovers and Russian output falls, a Reuters poll showed on Tuesday.
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Source: Reuters
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