Oil rose almost 1% on Wednesday, after hitting a three-month low in the previous session, as Chinese economic data bolstered hopes for a demand recovery and concern in the wider markets eased of a fresh financial crisis.
China’s economic activity picked up in the first two months of 2023, figures showed on Wednesday, as consumption and infrastructure investment drove recovery, following the end of strict COVID-19 containment measures.
“Oil prices are regaining ground this morning as traders cheer a flurry of positive macro data out of China,” said Stephen Brennock of oil broker PVM.
Brent crude climbed 54 cents, or 0.7%, to $79.99 a barrel by 0915 GMT. U.S. West Texas Intermediate crude futures (WTI) gained 76 cents, or 1.1%, to $72.09.
On Tuesday, both benchmarks shed more than 4% to a three-month low, pressured by fears that the collapse of Silicon Valley Bank (SVB) last week and other U.S. bank failures could spark a fresh financial crisis weighing on fuel demand.
Those fears were easing on Wednesday, analysts said. U.S. inflation data that was in line with expectations, bolstering bets on a smaller interest rate hike by the Federal Reserve at its meeting next week, also boosted sentiment.
“Investors and traders are feeling more at ease today,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
On Wednesday, the latest monthly report from the International Energy Agency flagged a coming boost to oil demand from China, while a day earlier OPEC had increased its Chinese demand forecast for 2023.
In other coming data points, investors will be watching the release of official U.S. inventory data later on Wednesday to see if it confirms the 1.2 million-barrel rise in crude stocks reported on Tuesday by industry group the American Petroleum Institute.