Tuesday, January 31, 2023
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Oil prices muted amid recession fears, OPEC report awaited

By Ambar Warrick

Investing.com — Oil prices moved little on Tuesday as markets awaited a slew of economic readings this week to gauge the potential for a recession, with focus also turning to demand forecasts from several major industry bodies, starting with the OPEC.

Crude prices showed a muted reaction to data showing that China’s economy grew at a better-than-expected pace in the fourth quarter, given that overall growth for 2022 slowed substantially from the prior year.

But improving trends in Chinese retail salesinflation, and industrial production helped brew some optimism over an economic recovery in the world’s largest crude importer.

London-traded Brent oil futures rose 0.3% to $84.44 a barrel, while West Texas Intermediate crude futures rose 0.2% to $79.31 a barrel by 22:02 ET (03:02 GMT). Both contracts fell about 1% on Monday.

Focus is now on a monthly report from the Organization of Petroleum Exporting Countries (OPEC), due later on Tuesday. Traders will be looking for any change in the cartel’s demand forecast for the year, amid expectations of a Chinese recovery and a potential global recession.

Separately, the International Energy Agency is also set to release a monthly report on Wednesday, with markets seeking similar cues from the organization.

Crude demand is expected to recover sharply this year on an economic revival in China, after the country began relaxing most anti-COVID measures in December. But given that the country is now struggling with its worst yet COVID-19 outbreak, the timing of such a recovery remains uncertain.

Fears of a global recession were also back in play. Two-thirds of private and public sector economists surveyed by the World Economic Forum in Davos said they expect a global recession this year, while a survey of CEO attitudes released by auditing house PricewaterhouseCoopers provided a gloomy outlook for the economy.

Focus this week is also on inflation data from the euro zone and the UK, as well as readings on retail sales and industrial production in the U.S. Markets are wary of a potential slowdown in growth as the effects of sharp monetary tightening in 2022 begin to be felt by the global economy.

A slowdown in economic growth would bode poorly for crude demand, and could potentially offset a recovery in China.




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