By Alex Lawler
LONDON (Reuters) -Oil rose over 1% on Thursday, extending gains after figures showed U.S consumer prices unexpectedly fell in December, and supported by optimism over China’s demand outlook.
The U.S. consumer price index dipped 0.1% and suggested inflation was now on a sustained downward trend. Top oil importer China is reopening its economy after the end of strict COVID-19 curbs, boosting hopes of higher oil demand.
Brent crude rose 97 cents, or 1.2%, to $83.64 a barrel by 1456 GMT and touched a high of $84.44, while U.S. West Texas Intermediate crude gained 99 cents, or 1.3%, to $78.40.
“By any metric, this number is much better than the previous reading and inflation is moving in the right direction, which should keep some pressure off the Fed,” said Naeem Aslam, analyst at Avatrade of the CPI data.
Both benchmarks jumped 3% on Wednesday driven by hopes that the outlook for the global economy may not be quite as pessimistic as has been feared.
“A softer landing for the U.S., and perhaps elsewhere, combined with a strong economic rebound in China following the current COVID wave could make for a much better year than feared and stimulate extra crude demand,” said Craig Erlam of brokerage OANDA before the CPI data was issued at 1330 GMT.
The market is also bracing for an additional curb on Russian oil supply due to sanctions over its invasion of Ukraine.
The U.S. Energy Information Administration said the upcoming EU ban on seaborne imports of petroleum products from Russia on Feb. 5 could be more disruptive than the EU ban on seaborne imports of crude oil from Russia implemented in December 2022.
(Additional reporting by Laura Sanicola and Emily Chow; editing by Jason Neely, Susan Fenton and David Evans)
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