Oil up as strong US economic data lifts up market sentiment

By Sibel Morrow

ANKARA (AA) – Oil prices increased on Friday over demand optimism after better-than-expected economic data in the US and hopes that the Chinese economy will recover from the wounds of COVID-19 pandemic.

International benchmark Brent crude traded at $87.82 per barrel at 0656GMT, a 0.40% increase from the closing price of $87.47 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $81.34 per barrel at the same time, a 0.40% gain after the previous session closed at $81.01 a barrel.

The US economy expanded 2.9% in the fourth quarter of 2022, coming higher than the market estimate of 2.6%, according to the Commerce Department's first reading released on Thursday.

The stronger-than-expected figure calmed fears that the Federal Reserve's rate hikes could cause a recession in the US economy this year.

The price upticks were limited by the country's rising crude oil inventories, which indicate falling demand.

US commercial crude oil inventories increased by 0.1% during the week ending Jan. 20, according to data released by the Energy Information Administration (EIA) late Wednesday.

Inventories rose by around 500,000 barrels to 448.5 million barrels against the market expectation of an increase of around 3.4 million barrels.

The Chinese economy had one of its worst performances in decades last year as growth was dragged down by numerous COVID-19 lockdowns followed by a deadly outbreak in December that swept across the country with remarkable speed.

China grew 3% for the year, as numbers released Tuesday showed, much less than in 2021 and short of Beijing's target of 5.5%.

However, hopes for a stronger demand in China rose after the country decided to lift all pandemic restrictions.