(Bloomberg) -- Oil moved higher as optimism over the Chinese demand outlook offset the potential for a large build in US crude stockpiles.
West Texas Intermediate rose as much as 1.3%, after earlier losing 1.1%. Chinese companies have been snapping up cargoes of US crude before Lunar New Year holidays. Earlier this week, the government issued a bumper batch of import quotas, spurring hopes of improved crude consumption.
US inventory data is due later that will continue to highlight the impact of a deep freeze late last year. Crude inventories jumped by 14.9 million barrels last week, the American Petroleum Institute reported, according to people familiar with the data. If confirmed by government figures later Wednesday, it would be the largest increase since February 2021.
Oil has had a rocky start to 2023, slumping almost 10% in the first two sessions of the year on global recession concerns, before subsequently trending higher. Investors are keenly watching for clues on the outlook for US monetary policy, with JPMorgan Chase & Co.’s Chief Executive Officer Jamie Dimon saying rates may have to move higher than 5%.
“The market remained buoyed by optimism of China demand recovery,” said Ole Hansen, head of commodities strategy at Saxo Bank.
Near-term time spreads are holding in a bearish contango structure, signaling ample supply. Global benchmark Brent’s prompt spread — the gap between the nearest two contracts — was 15 cents a barrel in contango.