Oil prices rose on Wednesday to their highest since early December on optimism that the lifting of China’s strict Covid-19 curbs will lead to a fuel demand recovery in the world’s top oil importer.

Brent crude futures were up $1.21, or 1.41 per cent, to $87.13 a barrel by 0942 GMT, while US West Texas Intermediate (WTI) crude futures were up $1.36, or 1.7pc, to $81.54. Both were at their highest since early December.

China’s economic growth slowed sharply to 3pc in 2022, missing the official target of “around 5.5pc” and marking its second-worst performance since 1976.

But the data still beat analysts’ forecasts after China started rolling back its zero-Covid policy in early December. Analysts polled by Reuters see 2023 growth rebounding to 4.9pc.

The lifting of Covid-19 restrictions in China is set to boost global oil demand this year to a new record high, the International Energy Agency (IEA) said on Wednesday, while price cap sanctions on Russia could dent supply.

The IEA report followed expectations from the Organisation of the Petroleum Exporting Countries (Opec) that Chinese oil demand would grow by 510,000 barrels per day (bpd) this year after contracting for the first time in years in 2022 due to Covid containment measures.

But Opec kept its 2023 global demand growth forecast unchanged.

Referring to China, PVM analyst Stephen Brennock said that “no other single entity will play a more significant role in shaping oil balances over the coming months”.

Further support came from expectations of a drawdown in US crude stocks by around 1.8 million barrels in the week to Jan 13, according to a Reuters poll.

The poll was conducted ahead of reports from the American Petroleum Institute, an industry group, due at 2130 GMT on Wednesday.

On the supply side, oil output from top shale regions in the United States is due to rise by about 77,300 bpd to a record 9.38m bpd in February, the US Energy Information Administration (EIA) said on Tuesday.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Little respite
03 Mar, 2024

Little respite

IS inflation on its way out? The Consumer Price Index showed that inflation dropped to 23.1pc in February from ...
More slaughter
Updated 03 Mar, 2024

More slaughter

Israel’s extremist leaders are on an apocalyptic mission to ethnically cleanse Gaza.
Without VCs
03 Mar, 2024

Without VCs

THE delay in appointing vice chancellors across Pakistan’s universities has mushroomed into a crisis, with one...
Urgent challenge
Updated 02 Mar, 2024

Urgent challenge

The incoming finance team will have to prioritise economic decisions over political considerations and personal whims.
Contempt ruling
02 Mar, 2024

Contempt ruling

AN Islamabad High Court decision penalising the city’s deputy commissioner, a senior superintendent of police and ...
Streets of death
02 Mar, 2024

Streets of death

A LIFE without a sense of permanence is one aspect of a human crisis as complex as homelessness. But the fact that...