Oil rises slightly due to supply shortage, Chinese demand hopes

  • Oil Markets, Tight Logistics – Chevron CEO
  • Oil prices could rise in the second half as Chinese demand returns – Gunvor CEO
  • China’s growth outlook down from last year’s target
  • Fed Chairman addresses Congress this week
  • The US February jobs report is also in focus

HOUSTON, March 6 (Reuters) – Oil prices edged higher on Monday, rebounding from early losses, as top oil executives at an energy conference in Houston discussed the supply crunch and hopes of increased Chinese demand.

The oil market and logistics are tight and vulnerable to any unexpected supply disruptions as Russian oil is still coming to market, but at different costs, said Mike Wirth, chief executive of Chevron Corp (CVX.N) , during the CERAWeek energy conference.

CEO of trading company Gunvor, Torbjorn Tornqvist, said crude prices could rise in the second half 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 US West Texas Intermediate (WTI) crude futures were up 78 cents, or 1%, to $80.46.

Oil was also supported by major crude exporter Saudi Arabia, which lifted prices of the flagship Arab light crude it sells to Asia for a second month in April, as well as a weaker dollar. .

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A weaker greenback makes dollar-denominated crude cheaper for overseas buyers and boosts demand.

Earlier in the session, both benchmarks were down more than $1 a barrel after China on Sunday set a lower-than-expected gross domestic product (GDP) growth target of 5% for this year, down compared to last year’s target of 5.5%. Political sources had told Reuters the target could be set at 6% for 2023.

China’s GDP grew only 3% last year. Premier Li Keqiang said on Sunday that the foundations for stable growth needed to be consolidated, insufficient demand remained a pronounced problem and the expectations of private investors and companies were unstable.

Oil traders are also concerned about interest rates around the world as global central banks have tightened policy to fight inflation.

Investors were awaiting testimony from US Federal Reserve Chairman Jerome Powell this week. Traders have started to price in rate hikes but are hoping for smaller increases than last year.

The Fed’s Powell will testify before Congress on Tuesday and Wednesday, when he is likely to be asked about the need for bigger increases in the world’s biggest oil consumer.

Future rate hikes in the US will also likely 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 “highly likely” the bank would raise interest rates this month to contain inflation.

Reporting by Arathy Somasekhar in Houston, additional reporting by Noah Browning in London, Mohi Narayan in New Delhi and Sudarshan Varadhan in Singapore Editing by David Goodman, Marguerita Choy and David Gregorio

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