Oil prices reportedly moved in different directions yesterday after the announcement of 2022 GDP data from China, eagerly awaited by the oil market.
The data indicated that China’s economy expanded by 3%, which is undoubtedly a positive figure, but was regarded as bad news for some because represents the weakest GDP figure in almost 50 years.
Brent crude was up soon after the release of the data, and West Texas Intermediate was down, both modestly, with more pronounced changes possible later in the day.
The 2022 GDP growth figure was substantially lower than what the Chinese government had aimed for, at 5.5%, but expectations are that the growth engine of Asia will stage a recovery this year.
The growth figure for the last quarter of last year reinforced these expectations. Although modest, at 2.9%, fourth-quarter growth topped expectations, which pegged it at 1.6% because of Beijing’s zero-Covid policy, which hobbled economic activity throughout the year.
“The Chinese economy is at a pivotal point, with disruptions from the protracted zero-Covid policy and its abrupt reversal likely to give way to a resurgence of at least moderate growth by Chinese standards,” Eswar Prasad, an expert on China finance from Cornell University, told the FT.
“Growth momentum coming out of this difficult period will depend on how much and what kind of stimulus the government employs to put the economy back on track,” he added.
“Businesses still face many difficulties in production and operation, scientific and technological innovation is not strong enough, and people still have considerable difficulties in employment,” the director of China’s national statistics bureau, Kang Yi, said, as quoted by CNBC.
“We still need to make strenuous efforts to promote overall economic improvement.”
Chinese demand has become the top bullish factor for oil prices lately, as the country is the largest importer of the commodity.
By Ken Okoye with agency report