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West Texas Intermediate (WTI) crude oil prices have broken above the $80 barrier despite disappointing growth plans coming out of China Monday.
On Monday at 1:50 p.m. EST, WTI was trading up 0.64% at $80.19 per barrel, up 51 cents on the day, while Brent crude was up 13% at $85.94.
Oil prices opened Monday lower on underwhelming data from China in terms of post-COVID economic recovery.
The oil price pullback earlier on Monday following Beijing’s GDP growth target of “around 5%” for this year, which comes in lower than 2022’s target of 5.5%, and also below expert expectations of around 5.24%. Some were hoping for 6%.
After digesting the disappointment, oil markets seem to have come to terms with the fact that last year, Chinese GDP expanded by only 3%, putting this year’s expected 5% into better perspective.
Also putting downward pressure on oil prices earlier on Monday were concerns in advance of testimony scheduled for later this week by U.S. Federal Reserve Chairman Jerome Powell.
Concerns about the level of an increase in oil demand sparked by a Chinese reopening have been vying with concerns about a future of tight supply, with Goldman Sachs and Vitol both recently predicting $100 oil later this year.
On March 1st, Saudi Aramco CEO Amin Nasser also noted what he called “very strong” demand from China.
Last week, Goldman Sachs’ Jeff Currie warned that the 2% contraction in global oil demand in the fourth quarter of last year was responsible for creating the spare capacity in oil, and that is now reversing because of China.
“Now, as China comes back, we’re gonna lose that spare capacity and we’re gonna be back to the same problems we had before,” Currie told Bloomberg.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com