Demand recovery expectations push Brent back towards $85/bbl

Front-month ICE Brent has gained by $0.38/bbl on the day, to $84.95/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

The outlook for Brent is being lifted by expectations that China's oil demand will recover in the months ahead, along with hopes that the US Federal Reserve will slow down its interest rate hikes due to a decline in US inflation.

OPEC producer UAE’s energy minister Suhail al-Mazrouei has stated that the nation is “dedicated to ensuring a balanced oil market in line with its plan to advance the 5 million b/d production target to 2027.”

Investment banks like Bank of America and Morgan Stanley have forecast Brent to average north of $100/bbl this year on the back of tight oil supply and China’s demand comeback.

Wood Mackenzie’s vice chair of Asia-Pacific energy, Gavin Thompson, has predicted that Chinese oil consumption will increase by around 1 million b/d this year, as “the population hits the roads and the skies.”

Downward pressure:

As world leaders and economic experts gather in Davos, Switzerland for the annual World Economic Forum meeting, oil market participants will look out for comments about a possible recession.

Two-thirds of chief economists surveyed by the World Economic Forum believe a global recession is likely this year, with almost 18% saying it is "extremely likely."

“Although there are some grounds for optimism, such as easing inflationary pressures, many aspects of the outlook remain gloomy,” the survey report said.

By Konica Bhatt

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