Oil prices rose in early trading Monday with Chinese demand in the spotlight after the Chinese government pledged to stabilize its economy in 2023 and support domestic consumption.
Brent crude, the international benchmark, was up 1% at $79.86 a barrel. West Texas Intermediate, the U.S. standard, was up 1% at $75.04 a barrel.
While the Federal Reserve’s indication that interest rates will probably stay high for longer sent jitters through oil markets last week, the market appeared to take heart from messages coming out of China’s Central Economic Work Conference, where Chinese officials pledged to focus on reviving economic growth next year.
“While there are unconfirmed reports of massive numbers of cases and fatalities in China from the spread of Covid, the government’s official message continues to stress upon the need to expand consumption as the key economic priority for 2023. This helps paint a better demand outlook for oil, as global demand slowdown concerns continue to mount,” analysts at Saxo Bank wrote in a research note on Monday.
The U.S. government’s plan to begin replenishing its Strategic Petroleum Reserve in February could provide additional demand stimulus. The Energy Department on Friday solicited bids for three million barrels to be delivered February, saying it was a good opportunity to make repurchases.
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