Oil on Friday posted its largest gain in three months this week, mostly recouping the prior week’s steep decline, as confidence in China’s recovery solidified among traders.
West Texas Intermediate for February delivery rallied 1.88 percent to close at US$79.86 per barrel, capping an 8.26 percent weekly advance that marked its strongest week since October last year.
Brent crude for March delivery rose 1.49 percent to US$85.28, up 8.54 percent from a week earlier.
Photo: Reuters
China is ramping up purchases of crude after Beijing issued a fresh round of import allowances, and consumption is poised to surge to a record this year following the nation’s dismantling of its “zero COVID” policy.
The factors that drove the selloff in the second half of last year — Chinese lockdowns and global recession fears — are now in reverse, said Bjarne Schieldrop, chief commodities analyst at SEB AB.
“When China reconnects with Asia and the world, there will be a significant increase in demand,” Schieldrop said.
Daily demand — which contracted last year — is to climb by 800,000 barrels per day this year, according to the median estimate of 11 China-focused consultants surveyed by Bloomberg News.
That would take consumption to an all-time high of about 16 million barrels per day, the survey showed.
Oil’s bulls, of which there are many, have built a large part of their outlook on growth in Chinese demand, with Goldman Sachs Group Inc’s Jeffrey Currie saying that crude is the “best reopening play.”
“Demand recovery is expected to accelerate from the second quarter onward as traffic rebounds and the number of flights, especially international flights, gradually recovers,” said Yitian Lin, research associate of oils and refineries at Wood Mackenzie Ltd, who said that daily demand could rise by 970,000 barrels.
Data on Friday showed that China’s crude imports hit a record for the month of December as shipments in the final quarter of last year came in almost one-fifth higher than the preceding three months.
Bolstering sentiment across markets, US consumer prices last month posted the first monthly decline since 2020, fueling expectations that the US Federal Reserve would slow the pace of interest-rate hikes.
Oil has pushed higher after a rocky start to the year, with forecasters from Goldman Sachs Group to hedge fund manager Pierre Andurand predicting prices would rally above US$100 a barrel this year.
There are also tentative signs that trading activity has picked up in the new year, with open interest across the main oil futures standing at its highest since late October.
Additional reporting by staff writer
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS