Oil prices rose on Wednesday, extending the previous session's gains, driven by optimism that a relaxation of China's strict COVID-19 curbs will lead to a recovery in fuel demand in the world's top oil importer.
Brent crude LCOc1 futures were up 52 cents, or 0.6%, at $86.44 a barrel at 0151 GMT, following a 1.7% rally in the previous session.
US West Texas Intermediate (WTI) crude CLc1 futures gained 55 cents, or 0.7%, to $80.73 a barrel, having risen 0.4% on Tuesday.
China's gross domestic product expanded 3% in 2022, missing the official target of "around 5.5%" and marking its second-worst performance since 1976. But the data still beatanalysts' forecasts after China rolled back its zero-COVID policy in December.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report Chinese oil demand would grow 510,000 barrels per day (bpd) this year after posting in 2022 its first contraction for years due to COVID containment measures.
But OPEC kept its 2023 global demand growth forecast unchanged at 2.22 million bpd.
"Growing hopes that China's fuel demand will pick up after a recent shift in its COVID-19 policy lent support to oil prices," said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.
"OPEC's optimistic outlook on China's demand also supported the market sentiment," he said, predicting a bullish tone for this week.
At the World Economic Forum in Davos, China's Vice-Premier Liu He on Tuesday welcomed foreign investment and declared his country open to the world after three years of COVID isolation.
Oil was also boosted by a weaker US dollar, which steadied on Wednesday although after falling against major currencies the previous day due to expectations a possible Bank of Japan policy shift could be a precursor a tighter monetary policy.
A weaker dollar makes greenback-denominated oil less expensive for other currency holders and encourages buying.
On the supply-side, oil output from top shale regions in the United States is due to rise by about 77,300 bpd to a record 9.38 million bpd in February, the US Energy Information Administration (EIA) said in a productivity report on Tuesday.
Russia, meanwhile, expects Western sanctions to have a significant impact on its oil product exports and its production, likely leaving it more crude oil to sell, said a senior Russian source with knowledge of the nation's outlook
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