Oil rebounds as China demand recovery optimism supports prices

Reuters

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    By Yuka Obayashi
       TOKYO, Jan 25 (Reuters) - Crude oil prices rebounded on
Wednesday as demand recovery hopes in top importer China
following its exit from COVID-19 pandemic curbs provided support
after prices dropped in the previous session on concerns about
global economic growth.
    Brent crude  LCOc1  futures gained 59 cents, or 0.7%, to
$86.72 per barrel by 0214 GMT after falling 2.3% in the previous
session. U.S. West Texas Intermediate (WTI) crude  CLc1  futures
rose 46 cents, or 0.6%, to $80.59 per barrel, having dropped
1.8% on Tuesday.
    The economic worries were exacerbated by a
bigger-than-expected build in U.S. oil inventories that was
reported after the market settled on Tuesday.
    U.S. crude stocks rose by about 3.4 million barrels in the
week ended Jan. 20, according to market sources citing American
Petroleum Institute figures on Tuesday. That was triple the
build of about 1 million forecast in a preliminary Reuters poll
on Monday. 
    "But the build is expected to be temporary as the supply
disruptions from a cold snap in the United States a few weeks
ago would only impact on the data in the next couple of weeks,"
said Hiroyuki Kikukawa, general manager of research at Nissan
Securities.
    Official data from the U.S. Energy Information
Administration will be released later on Wednesday.
    "Expectations that China's fuel demand will recover in the
second half of the year are growing and are likely to support
the market sentiment," Kikukawa said, predicting that WTI will
trade in a range between $75 and $85 a barrel in the coming
weeks.
    Oil supply should remain steady for the medium term as the
Organization of the Petroleum Exporting Countries (OPEC) and its
allies, a group known as OPEC+, is expected to keep their output
quotas.
    An OPEC+ panel is likely to endorse the producer group's
current oil output policy when it meets next week, five OPEC+
sources said on Tuesday, as the hopes for higher Chinese demand
are balanced by worries over inflation and the global economy.
 (Reporting by Yuka Obayashi; Editing by Christian Schmollinger)
 ((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))

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