Oil prices edged higher on Thursday on signs of China’s economic recovery. WTI price rallied, climbing above the $78 per barrel level. If the WTI price declines, it may encounter support near $73.6 per barrel, while resistance may be found near $79.5 per barrel.
Expectations of increased oil demand outlook in China boosted oil prices this week. Chinese manufacturing PMI data exceeded expectations on Wednesday, expanding at the fastest rate since 2012. Moreover, China’s factory activity rose in February for the first time in seven months, raising hopes for China’s economic recovery. China is the world’s largest energy importer and prolonged lockdowns have dampened oil demand. The Chinese government has eased some of its strident Covid regulations, abandoning its zero-Covid policy, fuelling hopes of economic recovery.
Oil prices are also supported by concerns that Russia will cut its oil exports more than previously announced. G7 leaders set a price cap on Russian oil exports on February 5th. Russia has announced plans to reduce oil output by 500,000 barrels per day as a retaliation for the price cap on the country's oil exports. Recent reports indicate that Russia may cut oil production even further, boosting oil prices.
On the other hand, U.S. crude inventories rose by 1.2 million barrels last week to a total of 480.2 million barrels. Even though market expectations were even higher, predicting a 1.7 million barrels raise, increased supply kept oil prices down. Moreover, the US sold an additional 26 million barrels of crude from its Strategic Petroleum Reserve on Tuesday in an attempt to offset the rise in oil prices.
In addition, recession concerns still run high, and aggressive rate hikes stifle economic activity, putting a lid on oil price gains. Current market odds lean towards further Fed tightening and an increase in interest rates up to 5.25%. US inflation data last week showed that price pressures in the US remain high and are not easing at the pace anticipated. ECB rate hike expectations also increased this week, as Eurozone CPI data showed that inflation is not cooling as fast as the ECB hoped.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX Global Ltd, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed please confirm that you understand and accept the risks associated with trading with a non-EU entity (as these risks are described in the Own Initiative Acknowledgment Form and that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX Global Ltd or any other entity within the Group.
Don't show this message again
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.
You can customize your selection of which cookies you want to accept.
These cookies are necessary for the website to function correctly and cannot be switched off.
Functional cookies allow the website to remember users' preferences and the choices you make on the website such as username, region, and language.