Oil set for weekly rise on China optimism, brighter US outlook

Bloomberg

Oil headed for a weekly gain, rebounding from a weak start to the year, on China’s improving demand outlook and cooling US inflation.
West Texas Intermediate was steady near $79 a barrel, after advancing more than 6% this week. The Brent benchmark is poised for its strongest week since October.
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 Covid Zero policy.
US consumer prices in December posted the first monthly decline since 2020, fueling expectations that the Federal Reserve will slow the pace of interest-rate hikes and adding some bullish sentiment across financial markets.
Oil has pushed higher after a rocky start to the year, with a raft of forecasters from Goldman Sachs Group Inc to top hedge fund manager Pierre Andurand predicting prices will rally above $100 a barrel in 2023. There are also tentative signs that trading activity has picked up in the new year.
“The selloff in the second half of 2022 was reduced China demand due to lockdowns and fears for a global recession due to higher interest rates — both 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.”
Meanwhile, the US House of Representatives voted to bar selling oil from the Strategic Petroleum Reserve to China, as Republicans use their newly-minted majority to shine a spotlight on Biden administration’s historic drawdown from the emergency supplies.
The White House said the Energy Department is required by law to sell the SPR oil in a competitive auction to the highest bidder, regardless of whether the bidder is a foreign company. It has also said that the release of oil from the reserve last year was needed to address price spikes caused by Russia’s invasion of Ukraine and ensuing supply disruptions.
The measure passed on a bipartisan 331-97 vote, but it’s not likely to be taken up in the Democratically-controlled Senate. The effort previews more actions by Republicans to demonstrate their opposition to the president’s decision to release 180 million barrels from the nation’s oil reserve.