LONDON (Bloomberg) — Oil stemmed a string of losses as further signs of China’s economy reopening were weighed against a tough outlook for demand in 2023.
West Texas Intermediate reversed an earlier decline to trade near $75 a barrel. China eased a range of COVID restrictions on Wednesday, including allowing some home quarantine and scrapping certain test requirements. The world’s top crude importer was also said to be shifting focus to the economy, with a growth target of about 5% under consideration. A softer dollar was also supportive for commodities priced in the currency.
Still, optimism surrounding China’s move to loosen its strict virus curbs was tempered by data showing shrinking exports. And among the gloomy predictions for the global economy, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said that he saw “bumpy times ahead.”
Crude has so far stumbled into the final month of the year, with the U.S. benchmark heading for the first back-to-back quarterly drop since mid-2019 as central banks tighten monetary policy. Concerns about the global growth outlook, alongside a soft physical market and falling liquidity have weighed on prices, despite China’s easing of Covid-19 restrictions.
The latest leg down came at a complex moment, with traders assessing the fall-out from Group of Seven curbs on Russian oil, including a price cap.
“Inventories remain quite low, spare capacity is tight,” Francisco Blanch, head of commodity and derivatives research at Bank of America said in a Bloomberg TV interview. “All the demand growth that we forecast for next year is coming from emerging markets.”
In response to the cap, which has been set at $60 a barrel, Russia is considering setting a price floor for its international oil sales. Moscow may either impose a fixed price for the nation’s barrels, or stipulate maximum discounts to international benchmarks at which they can be sold.
The American Petroleum Institute, meanwhile, reported that US stockpiles decreased by more than 6 million barrels last week, according to people familiar with the figures. Official inventories data follow later Wednesday.