(Bloomberg) -- Oil steadied as traders looked to a revival in Chinese demand this year after data showed that the economy fared better than expected last quarter.
Global benchmark Brent traded near $85 a barrel after shedding 1% on Monday. China’s economy grew more than anticipated in the fourth quarter as virus curbs swiftly ended, data from Beijing showed. That looks set to bolster traders’ expectations for higher energy consumption this year.
Ahead of the data, Goldman Sachs Group Inc. reiterated its case for higher crude prices, arguing that Western economies would avoid recession, aiding consumption, just as Chinese demand improves and Russian supply drops. Commodity markets are now pricing in a recession “that we don’t believe is going to materialize,” the bank said in a note dated Jan. 16.
“The underlying sentiment remains confident as the Chinese economy is opening up,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd. “A considerable demand boost for transportation fuel, especially for jet fuel, is anticipated when the Lunar New Year begins on Sunday.”
Crude has had a rocky start to 2023, sinking in the opening week on concerns over a global slowdown, before rebounding. Aside from China, oil has found support from growing expectations that the Federal Reserve is nearing an end to its aggressive series of interest-rate hikes and a weakening dollar.
Later Tuesday, the Organization of Petroleum Exporting Countries is scheduled to release its monthly analysis of the global market. OPEC Secretary-General Haitham Al Ghais said in a Bloomberg TV interview that he’s “cautiously optimistic” about the global economy.