Oil prices hold steady ahead of Chinese holiday travel

Singapore — Oil prices were stable on Tuesday as investors weighed strong holiday travel in China that could boost fuel demand against the prospect of rising interest rates elsewhere, slowing economic growth.

Brent crude rose 4c to $82.77 a barrel at 3.45am GMT, while US West Texas Intermediate crude gained 6c to $78.82 a barrel.

Oil futures had risen more than 1% on Monday on optimism that holiday travel in China would increase fuel demand in the world’s second-biggest economy.

Bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries. Still, the numbers remain far off pre-Covid levels, with long-haul airfares soaring and not enough flights available.

“Investors expressed optimism that Chinese holiday travel would boost fuel demand in the world’s largest oil importer,” said Leon Li, an analyst at CMC Markets. “In addition, expectations for a slowdown in US GDP growth in the first quarter prompted a pullback in the US dollar index, supporting gains in oil prices.”

A weaker US dollar can help global demand for oil by making it cheaper for holders of foreign currencies in other countries.

However, investors remain wary about central banks in the US, Britain and the EU potentially raising interest rates to curb inflation, which could slow economic growth and dent energy demand. The US Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates when they meet in the first week of May.

Investors on Tuesday awaited industry data on US oil stockpiles. Analysts polled by Reuters expected the data to show US crude inventories fell by about 1.7-million barrels in the week to April 21.

US government data on inventories is due on Wednesday. 

Reuters