Oil prices increased on Thursday, extending a gain of about 3% from the previous session. The excitement over record U.S. oil exports and indications that recessionary fears are subsiding outweighed worries about weak Chinese demand.
Even while oil stocks increased, data released on Wednesday revealed record U.S. crude exports, a positive indication for demand. Early trading saw a decline in the U.S. dollar on expectations that interest rate rises could become less ferocious. It seems that recent recession worries have subsided. However, continuing to depend on robust economic growth will be foolish.
What Happened in the Market?
By 1057 GMT, Brent crude had risen 56 cents, or 0.6%, to $96.25 per barrel. WTI crude for the United States increased by 41 cents, or 0.5%, to $88.32. Concerns over Chinese demand restrained the surge. Early this week, international investors sold Chinese assets due to concerns over economic development. China is the largest energy user in the world.
Concerns that President Xi Jinping’s escalating authority may result in a continuation of China’s convoluted economic policies weighed on mood, according to Hiroyuki Kikukawa, general manager of research at Nissan (OTC: NSANY) Securities. The dollar recovered early losses that had sent it to a one-month low, but it remained close to October’s low. The U.S dollar has been under pressure due to expectations that the U.S. Federal Reserve may switch to less aggressive interest rate rises.
The price of oil tends to decrease with a declining dollar and increases with a rising investor demand for risky assets. After soaring earlier this year following Russia’s invasion of Ukraine, crude prices have fallen on economic worries, with Brent coming very close to reaching its all-time high of $147 in March. Despite a warning from the World Bank that any plan will require active involvement from emerging market nations to be effective, the U.S. and Western officials are putting the finishing touches on their plans to set a ceiling on Russian oil prices.