Oil is falling following modest growth expectations for the Chinese economy in 2023
Tuesday – 14 Shaaban 1444 AH – 07 March 2023 AD Issue number [
16170]
A rig in an oil field in northern Germany (Archyde.com)
London: «Asharq Al-Awsat»
Oil prices fell during trading yesterday, Monday, following China set a modest target for economic growth this year of regarding 5 percent, which is lower than market expectations, while investors cautiously await the testimony of Federal Reserve Chairman (US Central Bank) Jerome Powell before Congress this week. .
Brent crude futures were trading down 1.2 percent at $84.73 a barrel by 14:23 GMT. US West Texas Intermediate crude futures fell 1.1 percent to $78.87 a barrel. China’s closely watched growth forecast fell short of last year’s target of 5.5 percent and came in at the lower end of expectations. Chinese Premier Li Keqiang said on Sunday that it is necessary to consolidate the foundation of stable growth in China, and insufficient demand remains an obvious problem, and the expectations of private investors and enterprises are unstable.
At the same time, oil prices are likely to be affected by interest rate hikes around the world as global central banks tighten policy due to fears of rising inflation. Traders are beginning to factor in interest rate increases around the world, but are hoping for smaller increases than last year.
Federal Reserve Chairman Jerome Powell will testify before Congress on Tuesday and Wednesday, where he is likely to be questioned regarding whether a larger interest rate hike is needed in the world’s largest oil consumer.
Future increases in interest rates in the US are also likely to depend on what the February jobs report reveals on Friday, followed by the inflation report for the same month due next week. European Central Bank President Christine Lagarde said over the weekend that it was “highly likely” to raise interest rates this month to curb inflation. The Australian central bank is expected to raise interest rates by 25 basis points on Tuesday. Meanwhile, Norway reaped record revenues from oil and gas last year, due in particular to the war in Ukraine, which contributed to the rise in the price of gas to unprecedented levels in Europe, according to official figures published Monday. The country earned 1,457 billion kroner ($133 billion) in hydrocarbon-related income, “the highest ever recorded,” according to estimates from Statistics Norway. For comparison, this amount constitutes three times the revenues in 2021 (498 billion crowns). Norway replaced Russia as the first supplier of gas in Europe, due to the decline in Russian supplies, taking advantage of the high prices that reached record levels during the summer. These exceptional revenues have sometimes led the Scandinavian country to be accused of “war profiteering,” a designation rejected by Oslo.
The Norwegian state collects oil and gas revenues through taxes imposed on oil companies, its direct stakes in oil and gas fields and infrastructure (pipelines…) and profits paid by the energy giant Equinor, of which it owns 67 percent.
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