Published by Jessica Weisman-Pitts
Posted on January 18, 2023
3 min readLast updated: February 2, 2026
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By Scott DiSavino
NEW YORK (Reuters) -Oil prices were little changed on Wednesday after giving up earlier gains as the market balanced worries about a possible U.S. recession versus optimism that the lifting of China’s COVID-19 curbs will fuel demand in the world’s top oil importer.
Brent futures fell 22 cents, or 0.3%, to $85.70 a barrel by 1:31 p.m. EST (1831 GMT), while U.S. West Texas Intermediate (WTI) crude fell 2 cents to $80.16.
China’s economic growth slowed sharply to 3% in 2022, missing the official target of “around 5.5%” and marking its second-worst performance since 1976.
But the data still beat analysts’ forecasts after China started rolling back its zero-COVID policy in early December. Analysts polled by Reuters expect growth to rebound to 4.9% this year.
The lifting of COVID-19 restrictions in China is set to boost global oil demand to a record high this year, according to the International Energy Agency (IEA), while price cap sanctions on Russia could dent supply.
Rystad Energy, a consultancy, said the effect of sanctions on Russian crude exports after 1.5 months of the European Union embargo and G7 price cap has not been as devastating as some industry players predicted.
Rystad said the losses were at about 500,000 barrels per day and that India and China remain key buyers of Russian crude.
Referring to China, PVM analyst Stephen Brennock said that “no other single entity will play a more significant role in shaping oil balances over the coming months.”
Analysts expect a drawdown in U.S. crude stocks of about 600,000 barrels last week, a Reuters poll showed, providing some price support. [EIA/S] [API/S]
The poll was conducted ahead of the release of industry data from the American Petroleum Institute (API) at 4:30 p.m. EST (2130 GMT) and the government’s report at 11 a.m. on Thursday. Both weekly reports were delayed a day due to Monday’s Martin Luther King Day federal holiday.
Reports showing U.S. retail sales and manufacturing production fell more than expected in December, prompting some in the market to worry about a recession.
“Coming on the back of the weakness in retail sales, the steep drop in industrial production and news of more job lay-offs adds to fears the U.S. could already be in recession,” analysts at ING, a bank, told customers in a note.
Microsoft Corp said it would eliminate 10,000 jobs and take a $1.2-billion charge, as its cloud-computing customers reassess their spending and the company braces for potential recession.
St. Louis Fed President James Bullard said that U.S. Federal Reserve policymakers should get the rate of interest above 5% “as quickly as we can” before pausing increases needed to battle an ongoing outbreak of inflation.
The Fed uses higher interest rates to reduce inflation. But those higher rates also make it more expensive for businesses and consumers to borrow money, slowing economic growth.
In other parts of the world, Germany is expected to narrowly avoid recession this year and Japan is nearing the phase where its monetary policy easing can be stopped, but Taiwan’s trade-dependent economy unexpectedly contracted in the fourth quarter.
(Additional reporting by Rowena Edwards and Julia Payne in London, Yuka Obayashi in Tokyo and Trixie Yap in Singapore; Editing by Marguerita Choy, Kirsten Donovan)
Oil demand refers to the total amount of oil that consumers and industries require for various uses, including transportation, heating, and production processes.
A recession is a significant decline in economic activity across the economy that lasts for an extended period, typically visible in GDP, income, employment, and trade.
Brent futures are contracts for the future delivery of crude oil from the North Sea, serving as a global benchmark for oil prices.
Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials, used primarily for fuel and energy.
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