Oil prices saw a slight recovery on Tuesday after a 2% drop in the previous session following reports that the Chinese economy grew faster than expected in the first quarter of the year.
The world’s second-largest economy grew at a 4.5% rate in the first quarter of 2023, according to the data seen by News About Nigeria.
The increase in oil refinery throughput to record levels in March further raised hopes for a recovery in oil demand.
Stephen Brennock, an oil broker from PVM, said, “As things stand, it’s all systems go in China, much to the relief of those betting on higher oil prices.”
Brent crude went up by 12 cents to $84.88 a barrel, while U.S. West Texas Intermediate rose by 8 cents to $80.91.
However, oil’s upside was limited due to concerns over another increase in U.S. interest rates. This factor has been supporting the U.S. dollar. Traders are anticipating a 25 basis point increase in rates at the May meeting of the U.S. Federal Reserve.
The dollar eased on Tuesday after earlier gains, but a stronger dollar could make commodities priced in the U.S. currency more expensive for buyers holding other currencies.
Craig Erlam, a broker from OANDA, said, “The next step may depend on global growth and whether the economy can weather the recent storm, particularly in the U.S., where tighter credit could significantly weigh on growth for the rest of the year,” referring to the outlook for oil prices.
The focus on Tuesday was the latest snapshot of U.S. inventories, with analysts predicting a 2.5 million-barrel decline in U.S. crude inventories, as well as falls in gasoline and distillates.
The American Petroleum Institute is due to release the first of two reports for the week at 2030 GMT. With China’s economy showing signs of growth, the oil market is expected to remain stable despite concerns over U.S. interest rates.