(New York) Oil prices, down early in the session on Monday following weaker than expected growth forecasts from China, recovered during the day in a market awaiting signals on US monetary policy.
A barrel of Brent North Sea crude for May delivery gained 35 cents, or 0.41%, to end at $86.18.
A barrel of US West Texas Intermediate (WTI), for April delivery, rose 78 cents, or 0.98%, to close at $80.46.
However, prices had started the session down in the wake of China’s publication on Sunday of an economic growth target of around 5% for 2023.
This objective, one of the most modest for decades, is lower than the forecasts of investors, who took the opportunity to “take their profits”, argued Stephen Innes, of SPI AM.
Until then, expectations of an economic recovery in China, the world’s largest crude importer, had pushed prices up.
The latest economic data from China published earlier last week (two PMI activity indices for February well above expectations) had reassured investors, constituting the first concrete signs of economic recovery since the abandonment of health restrictions.
Brent thus climbed by more than 3% last week, and the American WTI by more than 4%.
But the economic forecasts published Sunday by Beijing “disappointed investors on Monday, who were hoping for a more positive signal for Chinese demand,” said Robert Yawger of Mizuho Securities.
Crude prices nevertheless recovered during the day, without any particular trigger according to him. “It just looks like speculative investors have taken over the exchanges,” he commented.
Market participants, on the lookout for any signal on the trajectory of the next monetary policy measures in the United States, are particularly awaiting the hearing of the president of the American central bank (Fed), Jerome Powell, before the American Congress on Tuesday and Wednesday as well as the release of the February US labor market report on Friday.
For Edward Moya, an analyst at Oanda, oil has thus regained momentum “due to optimism about the possibility that the Fed will not trigger a hard landing” for the economy.
Other factors supporting prices include Saudi Arabia’s decision to raise the price of oil it sells in Asia on Sunday, according to Robert Yawger. “It implies that the Saudis think the Chinese will increase their purchases,” he said.