Commodity Market: WTI Crude Oil extends gains on stronger US GDP growth, China demand recovery optimism

Futures on US West Texas Intermediate Crude Oil extended gains from the prior trading session on Friday, supported by faster-than-anticipated US GDP growth and optimism over a swift recovery in China’s fuel demand as COVID-19 infections and deaths in the country significantly decreased from recent peak levels.

The latest preliminary data by the US Bureau of Economic Analysis showed the economy had expanded at an annualized rate of 2.9% in the fourth quarter, while exceeding market consensus of a 2.6% growth, as consumer spending grew 2.1%. In Q3, US GDP rose at a final 3.2%.

Meanwhile, China reported a 72% drop in critically ill COVID-19 patients from a peak early in January and a 79% drop in daily deaths among patients in hospitals from their peak. The data reinforced expectations of a normalization of China’s economic activity and a recovery in oil demand.

For the week, however, WTI Crude Futures were mostly flat, while Brent Futures were set for a small gain.

“Oil might have trouble making any substantial moves to finish the week as many traders will wait to see what happens with next week’s two massive events; the OPEC+ virtual meeting on output and the FOMC decision,” Edward Moya, senior market analyst at OANDA, was quoted as saying by Reuters.

OPEC+ members are expected to review crude oil production levels amid strong demand for jet fuel and diesel, while the Federal Reserve is expected to introduce another, smaller rate hike amid cooling US inflation and stronger GDP growth.

As of 9:49 GMT on Friday WTI Crude Oil Futures were gaining 1.31% to trade at $82.07 per barrel. Earlier this week, the black liquid went up as high as $82.62 per barrel, which has been its strongest price level since January 18th ($82.66 per barrel).

At the same time, Brent Oil Futures were gaining 1.31% on the day to trade at $88.62 per barrel. Earlier this week, the commodity went up as high as $89.09 per barrel, which has been its strongest price level since December 1st 2022 ($89.37 per barrel).