news/BKR/2023.01.19/Oil settles up more than 1% on China demand outlook, second weekly gain.txt

*OPEC and IEA forecast growing Chinese oil demand in 2023*Hopes for Fed downshift on interest rate hikes also
support*U.S. oil rig count falls by most since Sept 2021 - Baker
Hughes*Market shrugs off large increase in U.S. crude inventoriesNEW YORK, Jan 20 (Reuters) - Oil settled up about $1 a
barrel on Friday and notched a second straight weekly gain as
China's economic prospects brightened, boosting expectations for
fuel demand in the world's second-biggest economy.China's lifting of COVID-19 restrictions should bring global
demand to a record high this year, the International Energy
Agency (IEA) said on Wednesday, a day after OPEC also forecast a
Chinese demand rebound.Brent crude settled at $87.63 a barrel, up $1.47, or
1.7%. U.S. crude settled at $81.31 a barrel, gaining 98
cents, or 1.2%."Many traders believe it is highly likely that we are going
to see higher demand coming from China as it continues to
dismantle its COVID policies," said Naeem Aslam, analyst at
broker Avatrade.For the week, Brent logged a 2.8% increase and the U.S.
benchmark saw a 1.8% rise.Oil was also supported by hopes that the U.S. Federal
Reserve will soon downshift to smaller interest rate hikes,
which could brighten the U.S. economic outlook.A Reuters poll predicted the Fed will end its tightening
cycle after increases of 25 basis points at each of its next two
policy meetings and should then hold rates steady for at least
the rest of the year.Chances of a "soft landing" for the U.S. economy appear to
be growing, Federal Reserve Vice Chair Lael Brainard said on
Thursday. The Fed's next rate-setting meeting is over Jan. 31 to
Feb. 1.Also helping oil prices, Baker Hughes Co said the
U.S. oil rig count fell 10 to 613, its lowest since November.The world's two largest economies need more crude, said
Edward Moya, senior market analyst at OANDA."The oil market has been down on global recession fears, but
it is still showing signs it can remain tight a little while
longer," he said.Oil rose despite U.S. inventory figures this week showing
crude stockpiles rose by 8.4 million barrels in the week to Jan.
13 to about 448 million barrels, the highest since June 2021.A tapering off of sales from the U.S. Strategic Petroleum
Reserve helped reverse negative sentiment from the report and
push oil prices, said Andy Lipow, president of Lipow Oil
Associates in Houston.A price cap on Russian oil, which has been rippling through
the global market, is helping to boost crude prices, said Jim
Ritterbusch of consultancy Ritterbusch and Associates."Sanctions and caps on Russian crude are gradually acquiring
some price impact and will become more of a bullish factor when
last month's influx of Russian crude cargoes is absorbed into
the global market," Ritterbusch said.Russia was China's second-largest crude supplier in 2022,
while Saudi Arabia took the top spot.
(Additional reporting by Noah Browning, Alex Lawler, Sudarshan
Varadhan and Arathy Somasekhar; editing by Diane Craft, Kirsten
Donovan and David Gregorio)