Oil prices rose on Wednesday to their highest since early December on optimism that the lifting of China's strict COVID-19 curbs will lead to a fuel demand recovery in the world's top oil importer.
Brent crude futures were up $1.58, or 1.84%, to $87.50 a barrel by 1458 GMT. U.S. West Texas Intermediate (WTI) crude futures rose $1.83, or 2.28%, to $82.01. Both were at their highest since early December.
China's economic growth slowed sharply to 3% in 2022, missing the official target of "around 5.5%" and marking its second-worst performance since 1976.
But the data still beat analysts' forecasts after China started rolling back its zero-COVID policy in early December. Analysts polled by Reuters expect growth to rebound to 4.9% this year.
The lifting of COVID-19 restrictions in China is set to boost global oil demand to a record high this year, the International Energy Agency (IEA) said on Wednesday, while price cap sanctions on Russia could dent supply.
The IEA report followed a projection from the Organization of the Petroleum Exporting Countries (OPEC) for Chinese oil demand to grow by 510,000 barrels per day (bpd) this year after contracting for the first time in years in 2022 because of COVID containment measures.
But OPEC kept its 2023 global demand growth forecast unchanged.
Referring to China, PVM analyst Stephen Brennock said that "no other single entity will play a more significant role in shaping oil balances over the coming months".
Analysts expect a drawdown in U.S. crude stocks of about 1.8 million barrels in the week to Jan. 13, a Reuters poll showed, providing further price support. [EIA/S]
The poll was conducted ahead of reports from the American Petroleum Institute at 4:30 p.m. ET (2130 GMT) on Wednesday.
Price increases were somewhat tempered by a larger than expected drop in U.S. retail sales and factory output in December.
On the supply side, oil output from top shale regions in the United States is expected to rise by about 77,300 bpd to a record 9.38 million bpd in February, the U.S. Energy Information Administration (EIA) said on Tuesday.
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