Oil up over Chinese demand hopes

IZMIR, Türkiye

Oil prices increased on Wednesday over bullish demand expectations in the world's second largest economy, China, as a result of the loosening of its "zero-Covid" policy.

International benchmark Brent crude traded at $86.68 per barrel at 09.57 a.m. local time (0657GMT), up 0.88% from the closing price of $85.92 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 1.11% gain after the previous session closed at $80.45 a barrel.

The Chinese economy grew 3% year-on-year in 2022, better than the market forecast, but missed the official target of around 5.5%, the National Bureau of Statistics figures showed on Tuesday.

However, the country's latest move to remove coronavirus restrictions boosted market sentiments for bullish oil demand over the rest of the year.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) kept global oil demand growth unchanged for 2023 in its most recent monthly oil market report published Tuesday.

Oil demand is projected to grow by 2.2 million barrels per day (bpd) in 2023 to reach 101.8 million bpd with some minor upward adjustments due to the expected better performance in China's economy on the back of its reopening from COVID-19 restrictions.

Other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand.

On the supply side, President Vladimir Putin said on Tuesday that Russia increased its oil production by 2% to 535 million tons in 2022. Gas output dropped 11.8% but due to high prices, exporters ended the year with profits, the Russian leader said at a government meeting in Moscow.

"Budget revenues increased 10% last year to 27.8 trillion rubles ($404.7 billion)," he added.