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Crude oil traded higher on Wednesday morning following hopes of recovering demand in the Chinese market. This followed OPEC’s (Organization of Petroleum Exporting Countries) monthly oil market report’s forecast of demand recovery for crude oil in China.
At 10 am on Wednesday, March Brent oil futures were at $86.49, up by 0.66 per cent, and March crude oil futures on WTI were at $81.06, up by 0.76 per cent.
January crude oil futures were trading at ₹6,607 on the Multi Commodity Exchange (MCX) in the initial trading hour of Wednesday morning against the previous close of ₹6,517, up by 1.38 per cent, and February futures were trading at ₹6,645 against the previous close of ₹6,549, up by 1.47 per cent.
Measures to spur fiscal spending
OPEC’s monthly oil market report said Chinese oil demand is on course to rebound due to the recent relaxation of its zero-Covid measures and its GDP projected to grow by 4.8 per cent in 2023.
“In addition, China’s plans to expand fiscal spending to aid the economic recovery is likely to support oil demand in manufacturing, construction and mobility. The manufacturing sector is expected to start recovering relatively quickly, and the aviation sector is expected to see significant increases in both local and international travel, given pent-up demand. Furthermore, the performance of the resilient petrochemical sector is also projected to improve further,” it said.
China is a major consumer of crude oil.
On world oil demand in 2023, the OPEC report said it is unchanged at 2.2 million barrels per day. “This forecast remains surrounded by uncertainties, including global economic developments, shifts in Covid containment policies, and geopolitical tensions,” it said.
On the world economy, the report said it will continue navigating through many challenges, amid high inflation, monetary tightening by major central banks, and high sovereign debt levels in many regions. Moreover, geopolitical and Covid-related risks and uncertainties may add to the downside risk in a few selected economies, it said.
Meanwhile, the Vice-Premier of China, Liu He, said at the World Economic Forum in Davos that foreign investments were welcome in China, and the door to China will only open up further. This also helped boost the crude oil market.
Guar gum gains
January natural gas futures were trading at ₹300 on MCX in the initial trading hour of Wednesday morning against the previous close of ₹296.80, up by 1.08 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), February guar gum contracts were trading at ₹13,973 in the initial trading hour of Wednesday morning against the previous close of ₹13,768, up by 1.49 per cent.
January dhaniya futures were trading at ₹7,460 against the previous close of ₹7,546, down by 1.14 per cent.
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