Oil futures rose slightly today, recouping losses from earlier in the session as an expected rise in Chinese demand and further restrictions on Russian exports suggested market supply will remain tight.
Brent crude futures rose 36 cents, or 0.4%, to $85.34 a barrel this afternoon. US West Texas Intermediate (WTI) crude rose 21 cents, or 0.3%, to $79.69.
International Energy Agency's (IEA) head, Fatih Birol, said today that energy markets could be tighter in 2023, adding that he hoped prices would not rise further to ease pressure on energy-importing developing countries.
"Looking a bit longer term, I believe Russia's oil industry will face huge challenges," Birol said at the World Economic Forum in Davos.
"If the Chinese economy rebounds this year, which many financial institutions expect, then we may see very strong demand," he added.
But global economic headwinds, the possibility of aggressive increases to interest rates and a stronger US dollar have all weighed on oil demand.
Also bearish for oil was a surprise jump in US crude stocks and recession fears heightened by disappointing US retail sales and output data.
Data from the American Petroleum Institute showed US crude oil inventories rose by about 7.6 million barrels in the week ended January 13, market sources said.
The mean average forecast from a Reuters' poll of nine analysts had been for a fall of about 600,000 barrels.
"A bigger than expected fall in US producer prices, a drop in retail sales and the massive decline in manufacturing output last month raised worries once again about the economic cost of rate hikes," said PVM Oil analyst Tamas Varga.
US December retail sales fell by the most in a year, while manufacturing output registered its biggest drop in nearly two years as higher borrowing costs hurt demand for goods.
