Business Maverick: Oil advances as traders look to China, OPEC for fresh triggers

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Oil edged higher as investors weighed up the extent of China’s demand recovery and the likelihood of OPEC+ keeping output unchanged.

West Texas Intermediate rose toward $81 a barrel after declining by almost 2% on Tuesday as mixed earnings and weaker business activity spurred concerns about a US slowdown. China’s ditching of Covid Zero has boosted expectations that energy demand will eventually pick up in the largest crude importer.

Delegates from the Organisation of Petroleum Exporting Countries said that they expect an advisory committee of ministers to recommend keepingCrude has rebounded since collapsing about 10% in the year’s first two sessions of the year on recessionary fears. The recovery has rested largely on hopes that Chinese consumption will pick up, although a weaker dollar has also aided commodities.

At present, China is midway through a week-long break to mark the Lunar New Year, when people traditionally return to their hometowns. Thehas picked up, but the wave of travel may bring increased risk of Covid-19 spreading. The nation’s financial markets will reopen next week. The American Petroleum Institute reported US crude inventories rose 3.38 million barrels last week, according to people familiar with the figures. Government data – which showed commercial stockpiles swelled by more than 27 million barrels in the prior two weeks – are due later on Wednesday.

Further insight into the market will come as supermajors report quarterly earnings in the coming days, starting with figures and commentary from Chevron on Friday. Amid a milder winter in Europe and lingering concerns over the economic outlook, there are expectations this set of results could be the last strong ones for the industry, marking a peak of the cycle.

 

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