Oil prices remain calm as recovery in Chinese demand and high US inventories balance each other
Oil prices are broadly steady as the expectation of higher fuel demand in China as it reopens COVID curbs were offset by fears that U.S. crude stocks hitting their highest for months may signal weakening demand in the world's number 1 economy.
Brent crude futures gained 1 cent at 0446 GMT to $85.10 a barrel, while West Texas Intermediate (WTI) crude futures fell 3 cents to $78.44 a barrel. Both benchmarks have gained more than 6% so far this week.
US crude inventories continued to exceed expectations, somewhat dampening the bullish sentiments stemming from China's hopes of demand recovery.
U.S. crude inventories rose to the highest level since June 2021 last week, the Energy Information Administration (EIA) said on Wednesday. U.S. gasoline and distillate stocks also rose last week as demand remained weak.
Federal Reserve officials said Wednesday that more rate hikes are likely as they continue efforts to cool down inflation, but none are ready to suggest that January's hot jobs report could push them into a more aggressive monetary policy stance.
But the prospect of strong demand from China is supporting oil prices as the world's second-largest oil consumer ended more than three years of strict zero-COVID policy that included citywide lockdowns and mass testing in December.
Travel in China increased sharply after the Lunar New Year holidays. Chinese oil consumption is expected to increase by around 1.0 million barrels per day this year, with strong growth expected in the late first quarter. Overall, this is likely to increase global demand by 2.1 million barrels per day in 2023.
Meanwhile, BP Azerbaijan declared force majeure for Azeri crude oil shipments from Turkey's Ceyhan port on February 7, following the major earthquake that hit Turkey and Syria early Monday. The disaster halted operations in Ceyhan and interrupted the flow of crude oil from Iraq and Azerbaijan.
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