© Reuters. A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel
By Shadia Nasralla
LONDON (Reuters) – Oil prices rose to their highest in two weeks on Tuesday after China posted weak but expectation-beating annual economic growth data and on hopes that a recent shift in its COVID-19 policy will boost fuel demand.
Futures rose $1.14, or 1.4%, to $85.60 a barrel at 1224 GMT.
US West Texas Intermediate (WTI) crude was up 47 cents, or 0.6%, at $80.33. There was no settlement on Monday because of the US public holiday for Martin Luther King Day.
China’s gross domestic product expanded 3% in 2022, missing the official target of “around 5.5%” and marking the second-worst performance since 1976.
But the data still beat analysts’ forecasts after Beijing’s rolling back of its zero-COVID policy in December.
“A shallower economic hit in China from the Covid transition … has driven the latest rebound in crude prices,” said OANDA market analyst Craig Erlam.
Data released on Tuesday showed China’s oil refinery output in 2022 had fallen 3.4% from a year earlier for its first annual decline since 2001, although daily December oil throughput rose to the second-highest level of 2022.
“The country’s imports were up 4% in December and a considerable demand boost for transportation fuel … is anticipated when the Lunar New Year begins on Sunday,” said PVM analyst Tamas Varga.
He added that reports from the Organization of the Petroleum Exporting Countries (OPEC) at 1315 GMT and the International Energy Agency (IEA) on Wednesday will shed more light on the strength of oil demand while recession fears loom.
In a survey released at the annual World Economic Forum in Davos, two thirds of private and public sector economists polled expected a global recession this year, with about 18% considering it “extremely likely”.
A survey of chief executives’ views by PwC was the gloomiest since the poll was launched a decade ago.
A slight strengthening of the dollar from seven-month lows also pressured oil prices, making dollar-priced oil more expensive for buyers holding other currencies.