The futures of U.S. West Texas Intermediate (WTI) crude gained $1.86, or 2.5%, to $77.54 the barrel.
Both prices suffered slight losses during February: Brent yielded 0.6%, while WTI fell 1.7%.
“We are getting to a point where we are seeing some short covering because we are at the end of the month”said Phil Flynn, an analyst at Price Group.
Expectations of a demand recovery in China supported the gains, and the market awaits key data over the next two days. Economists polled by Reuters had expected factory activity in the world’s second-largest economy to pick up in February.
“China’s economic recovery will boost its demand for raw materials, with oil positioned to benefit the most”JPMorgan analysts said in a note to clients.
Ural crude exports to China from Russia’s western ports rose in February from a month earlier, due to lower freight costs and rising demand, Reuters sources said.
Oil prices are expected to rise above $90 a barrel towards the second half of 2023 as Chinese demand picks up and Russian production falls, a Reuters poll showed on Tuesday.
Similarly, JPMorgan oil analysts maintained their 2023 average price forecast for Brent at $90 a barrel.
Gains were capped by the threat of more US rate hikes after stronger-than-expected new orders for underlying US capital goods in January, and US Federal Reserve Governor Philip Jefferson, said that service inflation held “stubbornly tall”
The Organization of the Petroleum Exporting Countries has pumped 28.97 million barrels per day (bpd) this month, according to a Reuters poll, 150,000 bpd more than in January. Production is still down more than 700,000 bpd since September.
Meanwhile, in the United States, crude oil production fell in December to 12.10 million bpd, its lowest level since August 2022, Energy Information Administration (EIA) data showed.
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