Oil rises on optimism over China outlook

Singapore — Oil prices rose for a second straight session on Tuesday, driven by optimism about recovering demand in China and concerns over supply shortages after the shutdown of an export terminal after an earthquake in Turkey.

Brent crude futures rose 82c, or 1.01%, to $81.81 a barrel by 3am GMT, while West Texas Intermediate futures rose 82c, or 1.11%, to $74.93 a barrel.

“Crude prices are rising on expectations that China’s recovery will take hold and on supply outages from the earthquake that devastated Turkey,” Oanda analyst Edward Moya said.

The International Energy Agency (IEA) expects half of this year’s global oil demand growth to come from China, the agency’s chief said on Sunday, adding that jet fuel demand was surging.

Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for the first time in six months amid expectations of oil demand recovery, especially from China.

Operations at Turkey’s oil export terminal in Ceyhan were halted after an earthquake hit the region. The BTC terminal, which exports 1-million barrels a day of Azeri crude, will be closed from February 6-8.

Daniel Hynes, senior commodity strategist at ANZ bank in Sydney, also pointed to the shutdown of the 535,000-barrels per day phase 1 of the Johan Sverdrup oilfield in Norway’s area of the North Sea as a major driver of prices.

The oil markets will closely watch the US Federal Reserve’s chair Jerome Powell’s speech on Wednesday, analysts said. Interest rate hikes typically strengthen the dollar, which could make crude more expensive for non-American buyers.

“The rebound in oil prices is more like a cautious move ahead of Powell’s speech, when the Fed chair may provide more clues on the future rate hike path,” Tina Teng, an analyst at CMC Markets, said.

Reuters