On Thursday, oil increased by more than 1%, helped by hopes that China’s demand outlook and upcoming U.S. inflation data will indicate a slower rise in interest rates.
After lifting strict COVID-19 strict curbs, top oil importer China is reopening its economy, boosting confidence that fuel demand will increase in 2023.
Brent crude had risen $1.18, or 1.4%, to $83.85 per barrel, while West Texas Intermediate crude in the United States had risen $1.15, or 1.5%, to $78.56.
On Wednesday, both benchmarks increased by 3% on speculation that the outlook for the world economy may not be as dire as previously thought.
A better year than anticipated and increased crude demand could result from a softer landing for the U.S. and possibly elsewhere, along with a robust economic recovery in China following the current COVID wave.
Core U.S. consumer prices’ annual growth rate (USCPFY=ECI) dropped from 6% in November to 5.7% in December. The headline inflation rate (USCPI=ECI) is zero month over month. The market is preparing for further restrictions on Russian oil due to sanctions over its invasion of Ukraine.
EU Ban Will Have a Negative Impact
The European Union’s ban on the seaborne import of Russian petroleum products, which will take effect on February 5, may have a greater negative impact than the EU’s ban on the seaborne import of Russian crude oil, which took effect in December 2022. Natural gas is a useful transitional fuel for a society looking to switch from coal to renewable energy. The idea is that as solar and wind farms are constructed, natural gas can take the place of “dirtier” fuels like coal and, in some cases, oil.
But research suggests that natural gas isn’t as environmentally friendly as once believed because of methane emissions, the primary component, during its extraction and transport.
United Nations agency, to achieve the most ambitious goals of the Paris Agreement by 2030, the world will need to reduce its greenhouse gas emissions by more than 40%.