Oil pushed higher on Wednesday as data from China and India boosted investor outlook. The rise in Chinese factory activity has boosted oil demand from the world’s largest crude importer, thereby offsetting concerns about high U.S. oil reserves.
The news was positive in India as well, where domestic refined oil-product sales skyrocketed in February. In addition to double-digit rises in gasoline, diesel, and jet fuel sales, Indian consumers are joining their Chinese counterparts in purchasing oil cargoes from Russia’s far east.
West Texas Intermediate headed towards $78 per barrel, thereby erasing an earlier drop. Further growth is expected as China continues to ramp up its manufacturing activities after repealing its Covid Zero program near the end of last year.
“Prices might gain support from signs of an economic rebound from the world’s largest oil importer,” Ravindra Rao, head of commodities research at Kotak Securities Ltd. in Mumbai said of China’s economic rebound. “The nation’s crude consumption is expected to hit pre-pandemic highs and might contribute to most of the global oil demand in 2023.”
Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia cautioned that the one area for concern for global oil markets is the potential Russian oil supply halts after the country decided to limit its exports in relation to Western sanctions.
