Oil prices edged slightly higher on Monday, bouncing back from early losses, as top oil executives at an energy conference in Houston discussed supply tightness and hopes for rising Chinese demand.
Oil market and logistics are tight and vulnerable to any unexpected supply disruption, as Russian oil is still getting to the market, but at different costs, oil major Chevron Corp Chief Executive Mike Wirth said at the CERAWeek energy conference.
Trading company Gunvor’s CEO Torbjorn Tornqvist said crude prices may rise in the second half of the year as Chinese demand returns to the market, adding that the oil market has stabilized.
Brent crude futures were trading up 35 cents, or 0.4% at $86.18 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up 78 cents, or 1%, at $80.46.
Oil was also supported by top crude exporter Saudi Arabia raising prices for the flagship Arab light crude it sells to Asia for a second month in April, as well as a weaker dollar.
A weaker greenback makes dollar-denominated crude cheaper for foreign buyers and boosts demand.
Earlier in the session, both benchmarks had decline by more than $1 per barrel after China on Sunday set a lower-than-expected 5% gross domestic product (GDP) growth target for this year, down from last year’s 5.5% target. Policy sources had told Reuters the target could be set as high as 6% for 2023.
China’s GDP grew last year by only 3%. Premier Li Keqiang on Sunday said the foundation for stable growth needed to be consolidated, that insufficient demand remained a pronounced problem and expectations of private investors and businesses were unstable.
Oil traders are also concerned about interest rates across the world as global central banks have been tightening policy to fight inflation.
Investors awaited U.S. Federal Reserve Chair Jerome Powell’s testimony this week. Traders have started factoring in rate hikes but are hoping for smaller increases than last year.
The Fed’s Powell will testify to Congress on Tuesday and Wednesday, when he is likely to be quizzed on whether larger increases are needed in the world’s biggest oil-consuming country.
Future U.S. rate hikes are also likely to depend on what the February payrolls report reveals on Friday, followed by the February inflation report next week.
Over the weekend, European Central Bank President Christine Lagarde said it was “very likely” the bank would raise interest rates this month to keep a lid on inflation.