Oil mixed amid weak China economic data, sustained hopes for 2023Business
Oil prices were mixed on Tuesday after China posted its weakest economic growth in nearly half a century, while its late-2022 U-turn in Covid policy still supported hopes of recovery in the country’s fuel demand this year.
Brent crude futures had risen 16 cents, or 0.2 per cent, to $84.62 by 0414 GMT, recouping some of the 1pc loss of the previous session.
US West Texas Intermediate (WTI) crude futures slid 60 cents, or 0.8pc, to $79.26 from Friday’s close. There was no settlement on Monday due to the United States having a holiday for Martin Luther King Day.
“Brent crude has gained nearly 10pc over the past 10 days as optimism over China’s reopening boosted sentiment. However, the outlook for the rest of the global economy is uncertain,” ANZ commodity analysts said in a client note.
ANZ also pointed to a jump in crude supply from Russia weighing on the market, with seaborne exports having risen to 3.8 million barrels per day last week, the highest level since April.
China’s gross domestic product expanded 3pc in 2022, badly missing the official target of “around 5.5pc” and marking the second-worst performance since 1976, as the last quarter was hit hard by stringent Covid curbs and a property market slump.
The poor economic data still beat analysts’ earlier forecasts as Beijing’s rollback of its zero-Covid policy in December shored up consumption.
Data on Tuesday also showed China’s oil refinery output in 2022 had fallen 3.4pc from a year earlier, its first annual decline since 2001, while daily December oil throughput rose to the second-highest level of 2022.
“With a stronger end to 2022 than we had expected, plus indications of stronger retail expenditure ahead, the outlook for GDP growth in 2023 has improved compared to our prior outlook,” Iris Peng, chief economist of greater China from ING bank, said in a note.
But Peng warned that China still faced considerable headwinds, including likely recessions in the United States and Europe this year.
In a bearish survey released at the annual Davos summit, two-thirds of private and public sector economists polled expected a global recession this year, with about 18pc considering it “extremely likely”.
At the same time, a survey of chief executives’ views by PwC was the gloomiest since the firm launched the poll a decade ago.
A rise in the dollar off seven-month lows also put pressure on oil prices, as a stronger greenback makes oil more expensive for those holding other currencies.