Oil prices rose on Thursday, extending a more than three per cent rally in the previous session, boosted by record US crude exports and a weaker US dollar, though gains were capped in Asia due to lingering fears over slack demand in China.
Brent crude futures gained 20 cents, or 0.2pc, to $95.89 a barrel by 0332 GMT. US West Texas Intermediate (WTI) crude climbed 19 cents, or 0.2pc, to $88.10 a barrel.
US crude stocks rose 2.6 million barrels last week, according to weekly government data on Wednesday, with crude exports rising to 5.1m barrels a day, the most ever.
“Solid US crude exports raised optimism over demand and prompted fresh buys, but concerns that China’s muddled economic policies may continue under President Xi Jinping’s growing power limited gains in Asia,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Global investors dumped Chinese assets early this week on fears that ideology may increasingly trump growth under China’s most powerful leader since Mao Zedong.
The World Bank on Wednesday said it expects energy prices to decline by 11pc in 2023 after this year’s 60pc surge following Russia’s invasion of Ukraine, although slower global growth and Covid restrictions in China could lead to a deeper fall. Moscow calls its actions in Ukraine “a special operation”.
Meanwhile, the dollar’s weakness added support, as the greenback’s strength of late has been a notable factor inhibiting oil market gains. The dollar retreated on Thursday as market expectations mounted that the US Federal Reserve will tone down its aggressive stance on interest rate hikes.
A weaker dollar makes greenback-denominated crude less expensive for other currency holders.
US and Western officials are finalising plans to impose a cap on Russian oil prices amid a warning from the World Bank that any plan will need active participation of emerging market economies to be effective.
Officials said no price range has been decided yet, however one person familiar with the process said the cap will be determined in line with the historical average of $63-64 a barrel — a level that could form a natural upper limit.
