Oil rose with traders interpreting Saudi Arabia’s surprise hike of its crude prices as a signal of confidence in China’s demand outlook.
(Bloomberg) — Oil rose with traders interpreting Saudi Arabia’s surprise hike of its crude prices as a signal of confidence in China’s demand outlook.
The more-than-$2 dollar boost to West Texas Intermediate on Tuesday came after Saudi Aramco increased most of its official selling prices for shipments to Asia in March. The decision confirms that the oil titans see China’s demand likely rising in the next month, said Daniel Ghali, a commodity strategist at TD Securities.
“The data that we’re tracking, which includes international flight activity, suggests a significant boom in Chinese travel demand,” Ghali said. “That alone, we expect, is going to translate to a 1.4 million increase in oil demand this year.”
Oil has fluctuated in a relatively narrow range so far this year, with the global Brent benchmark swinging between about $80 and $90 a barrel. While traders are awaiting more signs of stronger Chinese demand, that has been offset by indications of oversupply in the near term.
Markets might get further direction later today from Fed Chair Jerome Powell who is set to speak and the Energy Information Administration’s release of weekly data on Wednesday.
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