Oil swung between small gains and losses as traders weighed a murky global economic outlook against optimism over increased demand from China.
(Bloomberg) — Oil swung between small gains and losses as traders weighed a murky global economic outlook against optimism over increased demand from China.
West Texas Intermediate fluctuated around $81 a barrel, paring an earlier gain.
China’s consumption has been picking up ahead of Lunar New Year celebrations, after the world’s top crude importer abandoned Covid Zero restrictions. The nation’s biggest oil trader has also been on a buying spree, and some Iranian barrels appear to be making their way to China.
“China reopening has been the story that has been driving the prices recently and that hasn’t changed,” said Norbert Ruecker, head of economics and next generation research at bank Julius Baer. “A sharper move upward hasn’t materialized due to statistics this week indicating that the oil market is well supplied.”
Oil’s rally has been limited amid signs that officials are still looking to cool inflation. Two top Federal Reserve officials made the case this week that higher interest rates are still needed to tame inflation. A guage of the dollar edged higher on Friday, after a recent trend downward.
Separately, US crude inventories rose by 8.4 million barrels last week for a fourth weekly gain, the nation’s Energy Information Administration reported on Thursday. Stockpiles at Cushing, Oklahoma jumped to the highest level in a year.
In the coming weeks, traders will be looking for any impact of European Union restrictions on Russian seaborne refined-product exports, which take effect Feb. 5. The ban follows similar measures on crude shipments introduced last year.
The Biden administration is also inclined to oppose any move to lower a price cap on Russian crude exports, despite a push by some European countries to squeeze Moscow’s revenues even further amid the war in Ukraine.
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