Oil rose for a sixth day on hopes that US inflation is cooling and amid a spate of Chinese crude purchases.
West Texas Intermediate rose above $78 a barrel and was heading for the longest run of daily gains since February. Equities were also stronger as investors wagered that American inflation eased ahead of data due later Thursday, reducing pressure on the Federal Reserve to hike interest rates. The dollar fell, boosting the appeal of commodities priced in the currency.
China’s crude buying after Beijing issued a bumper batch of import quota this week is adding bullish sentiment about demand. The country has stepped up purchases of US and West African crudes in recent days.
“The mood is unreservedly upbeat,” said Tamas Varga an analyst at brokerage PVM Oil Associates. “But let us remember: it can turn sour as quickly as it has improved if inflationary pressure proves entrenched.”
Oil’s recent push higher gathered steam after a rocky start to the year amid fears over a global economic slowdown. Still, many analysts remain bullish on the longer term outlook. Goldman Sachs Group Inc. said on Wednesday that it expects crude to hit $110 by the third quarter as China’s economy reopens, while Morgan Stanley sees a tighter second half to the year.
- WTI for February delivery rose 1.1 per cent to $78.25 a barrel at 10:18 a.m. in London.
- Brent for March was 1.1 per cent higher at $83.57.
There are also tentative signs that trading activity has picked up in the new year. Open interest across the main oil futures contracts this week climbed to the highest level since October. Low levels of futures holdings has been one driver of oil market volatility in recent months.
© 2023 Bloomberg L.P.