Oil prices rebounded on Thursday, January 5, after falling more than 9% at the start of the new year, making their worst start to the year in 30 years, as investors took advantage of the decline to buy futures contracts on expectations that require fuel will remain stable over the long term.
The recovery came after two days of steep declines as investors worried about a possible global recession and short-term economic indicators in the world’s two biggest oil consumers, the US and China, looked weak.
Brent crude futures rose 59 cents to $78.43 a barrel, while US West Texas Intermediate crude futures rose 69 cents to $73.53 a barrel.
During the previous two sessions, Brent and U.S. crude fell more than 9%, in the biggest two-day loss at the start of a year since January 1991, according to data from Refinitiv Eikon.
Economic data in the US influenced prices in the previous session.
The Institute for Supply Management said U.S. manufacturing contracted further in December, falling for the second straight month to 48.4 from 49.0 in November, the weakest reading since May 2020.
A US Department of Labor survey also showed job vacancies fell by 54,000 to 10.458 million on the last day of November, raising fears the Federal Reserve may use the tight job market as a reason to keep jobs. higher interest rates for a longer period.
U.S. crude oil inventories rose 3.3 million barrels last week, while gasoline inventories rose 1.2 million barrels and distillate inventories fell, according to market sources citing data of the American Petroleum Institute.
Government data on inventories is due on Thursday.
As for China, WHO officials said data shows no new variant of the coronavirus has been found, but the country is not providing the true numbers of those who have died from the virus’s recent rapid outbreak.
Fears of economic turmoil in light of the spread of COVID-19 in China, the world’s largest oil importer, added to pessimism about oil prices.
And the Chinese government increased its oil derivatives export quotas in the first batch of 2023, which points to expectations of weak domestic demand.
