Oil gains after robust Chines economic activity data

Oil prices rose on Wednesday as China’s factory output and retail sales beat expectations, a day after the International Energy Agency (IEA) raised its oil demand growth forecast for 2023.

Brent futures rose 20c, or 0.2%, to $82.67 a barrel by 4.27am GMT, while US West Texas Intermediate (WTI) crude rose 15c, also 0.2%, to $78.28.

China’s October economic activity perked up as industrial output grew at a faster pace and retail sales growth beat expectations, an encouraging sign for the world’s second-largest economy.

The IEA joined oil cartel Opec and its allies (Opec+) in raising oil demand growth forecast for 2023, despite projections of slower economic growth in many major countries.

“It [IEA] sees oil demand remaining healthy. It raised its forecast due to better-than-expected consumption in China,” ANZ Research said in a note on Wednesday.

The expectation that the US Federal Reserve could cut interest rates next northern spring sent the dollar down to a two-and-a-half-month low against a basket of other currencies. A weaker dollar can boost oil demand by making crude cheaper for buyers using other currencies.

The US Energy Information Administration (EIA) will release its first oil inventory report in two weeks on Wednesday. EIA did not release a storage report last week due to a systems upgrade.

For the week ended November 10, analysts forecast energy firms added about 1.8-million barrels of crude into US stockpiles, according to a Reuters poll, in line with from the American Petroleum Institute out Tuesday.

Reuters