Oil prices rise on strong Chinese demand

Oil prices rise on strong Chinese demand

Oil prices bounced ahead for a second session on Friday, buoyed by stronger than expected U.S. economic growth and hopes of a rapid recovery in Chinese demand as COVID 19 cases and deaths plunged from last month's peak levels.

The price of crude was up 30 cents, or 0.34 per cent, to $87.77 a barrel by 0321 GMT, while the US crude rose 34 cents to $81.35 per barrel, a 0.42 per cent gain. Both benchmarks had gained more than 1 per cent on Thursday.

Edward Moya, senior market analyst at OANDA, said that oil might have trouble making any significant moves to finish the week as many traders will wait to see what happens next week with the OPEC virtual meeting on output and FOMC decision.

OPEC delegates will meet next week to review crude production levels, as well as strong demand for diesel fuel and jet fuel. The U.S. Federal Reserve will decide on another rate hike as inflation cools and gross domestic product improves.

The gains on U.S. crude were limited by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, earlier this week.

On the first day of the return of Chinese stock markets, oil markets were boosted by broad optimism, as China's reopening still plays a major role in boosting demand outlook, according to Tina Teng, analyst at CMC Markets.

Daily deaths among COVID 19 patients in hospitals have dropped 79 percent from their peak earlier this month, pointing to a normalisation of the Chinese economy and boosting expectations of a recovery in oil demand.

The recent outage in the U.S. refineries helped push up gasoline prices, but the U.S. crude inventories hit a 16 month high, Teng said.