Oil prices rise as the outlook for China's demand brightens and after Turkey's earthquake ignites supply concerns
- Oil prices rose for a second day Tuesday thanks to hopes that China's reopening will strongly boost demand.
- The gains come after the IEA's chief said OPEC+ may have to raise crude output to meet Chinese demand.
Oil prices gained for a second day Tuesday as investors grew hopeful about a recovery of demand in China, while the shutdown of a key terminal in Turkey after a massive earthquake raised worries about supply.
Brent crude futures, the global benchmark, were up 1.4% at $82.14 a barrel at last check, while US benchmark West Texas Intermediate crude rose 1.9% to $75.51 a barrel. Prices are staging a comeback from three-week lows hit Friday after a blowout US monthly jobs report that raised concerns about higher interest rates.
"Crude oil trades higher for a second day following last week's long-liquidation-driven slump," Ole Hansen, head of commodity strategy at SaxoBank, said Tuesday.
"The turnaround was given further support after Turkey halted around 1m b/d of flows from Northern Iraq to the Ceyhan export terminal following a major earthquake in the region."
The International Energy Agency expects half of the growth in global oil demand this year to come from China, its executive director Fatih Birol said Sunday. He said the OPEC+ alliance of leading oil producers may need to raise its oil output targets to keep up with that reopening demand as Beijing eases its strict COVID-19 curbs.
On the supply side, investors are watching the situation in Turkey after an earthquake led to the shutdown of a key oil export terminal in the port city of Ceyhan. The terminal ships 1 million barrels a day, according to analysts.
A 7.8 magnitude earthquake hit in the early hours Monday, followed by a second earthquake later the same day whose tremors were felt as far away as Cyprus and Iraq, the US Geological Survey said.
The natural disaster in Turkey has threatened the supply equation and was a major focal point for investors, according to Naeem Aslam, chief market analyst at Avatrade.
"Traders are also optimistic about demand in China as economic data suggests that the second biggest economy of the world is on the right threat and there are few concerns over an economic slowdown," Aslam said.
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