The price of oil rose again, reaching a new 4-month high, helped by favorable Chinese data, as well as increased geopolitical risks. The price increase was also accompanied by a jump in the open interest. Holdings have surged to the highest since October 2021, with a gain seen toward the end of the last week.
The National Bureau of Statistics (NBS) said that industrial production increased by 7.0% in the first two months of 2024 after rising by 6.8% in December. It was the fastest growth in almost two years. Economists had expected a 5% increase. Meanwhile, retail sales increased by 5.5% per annum in the period from January to February. In December, sales rose by 7.4%. Consensus estimates suggested an increase of 5.2%. The eight-day Lunar New Year holiday in February saw a solid return of travel, which supported revenue of tourism and hospitality sectors. NBS also said that in the first two months of 2024, investments in fixed assets increased by 4.2% per annum, while economists had forecast growth of 3.2%. For the whole of 2023, they increased by 3.0%. Overall, the latest data will be welcomed by policymakers who seek to support unsustainable economic growth and have set a growth target for 2024 of about 5%.
In Russia, meanwhile, drone strikes over the weekend hit multiple plants, some deep within the country’s territory. "Strikes on Russian refineries added $2-$3 per barrel of risk premium to crude last week. But for the next significant move up or down, oil will be waiting for new signals," Vanda Insights said.
Market participants are also preparing for the Fed meeting, hoping to get more clarity on the timing of monetary policy easing. The Fed is likely to keep rates unchanged at the end of the March meeting, but the probability of a rate cut at the June meeting fell to 57.1% from 71.6% a week earlier. Lower interest rates will boost demand in the United States, the world's largest oil consumer, which will support oil prices.