Oil prices rise as OPEC’s optimistic China demand outlook boosts market sentiment

Oil prices slightly increased on Wednesday, clawing back some of gains, as OPEC’s prediction for strong economic and oil demand growth from China as its economy continued to reopen overshadowed financial crisis in the US after the collapse of two major banks.

International benchmark Brent crude traded at $78.33 per barrel at 9.26 a.m. local time (0626GMT), up 1.13% from the closing price of $77.45 a barrel in the previous trading session.

At the same time, American benchmark West Texas Intermediate (WTI) traded at $72.20 per barrel, a 1.21% increase after the previous session closed at $71.33 a barrel.

The Organization of Petroleum Exporting Countries (OPEC) released its most recent monthly oil market report on Tuesday.

The group said it anticipates that the OECD economies will continue to be supported by healthy consumption and investment.

In the emerging economies, OPEC said China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth.

OPEC’s optimistic short-term predictions helped the oil prices to take some of their earlier losses after the sudden collapse of two large banks and investor concerns for economic environment in the US.

Moody’s lowered the outlook for the US banking system from stable to negative after the Federal Deposit Insurance Corporation (FDIC) took control of the assets of Silicon Valley Bank (SVB) and Signature Bank in less than one week, and President Joe Biden assured the nation that depositors’ money will be protected.

Moody’s also said the Fed’s monetary tightening is expected to continue, which could deepen challenges at some banks.

• American Benchmark West Texas Intermediate (WTI)