Crude oil futures scored their largest gain in three months this week, mostly recouping last week’s 8%-plus decline, as traders grew increasingly confident in China’s recovery.
The “Chinese consumption machine” appears to be ramping up, RBC energy strategist Michael Tran said, noting December crude imports totaled 10.9M bbl/day, up 830K bbl/day from the previous 11 months of 2022, while crude inventories are steadying but down ~30M barrels from the summer 2022 peak.
China’s economic reopening was the primary driver for oil this week, but signs of easing inflation in the latest CPI data also added to optimism about the U.S. economy either heading for a soft landing or a mild recession.
Front-month Nymex crude (CL1:COM) for February delivery settled +8.2% to $79.86/bbl this week, and March Brent crude (CO1:COM) closed +8.5% on the week to $85.28/bbl, both posting their forth weekly gain in five.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (DRIP), (GUSH), (USOI), (NRGU)
Oil has pushed higher after a rough start to the year, with forecasters from Goldman Sachs to hedge fund manager Pierre Andurand predicting prices will rally well above $100/bbl in 2023.
The S&P energy stock ETF (XLE) finished the week +2.7%.
Top 10 gainers in energy and natural resources this week: (NASDAQ:BWEN) +191.6%, (ICD) +44.7%, (SLDP) +36.3%, (FLNC) +34.4%, (NRGV) +30.7%, (STEM) +30.3%, (INDO) +27.9%, (FRO) +26.8%, (WAVE) +26.6%, (AE) +26%.
Top 3 decliners in energy and natural resources this week: (KNOP) -35.5%, (DFLI) -18.1%, (AZRE) -11.5%.