NEW YORK: Oil prices climbed more than 3% on Tuesday after the head of the US central bank eased market concerns over interest rate hikes, while recovering demand in China also boosted prices.
Brent crude futures were up $2.52, or 3.1%, to $83.51 a barrel by 1:07 p.m. EST (1807 GMT), while West Texas Intermediate US crude futures rose $2.77, or 3.7%, to $76.88 per barrel.
US Federal Reserve Chair Jerome Powell said on Tuesday that very strong jobs data released last week simply affirmed that the central bank has some way to go on raising rates.
While declining to say whether knowing about the vigor of the data would have affected last week’s 25-basis-point rate rise, Powell told the Economic Club of Washington that the January jobs data “shows you why this will be a process that takes a significant period of time,” when it comes to tightening monetary policy.
The US dollar index fell after the data, raising oil prices. Interest rate hikes typically strengthen the dollar, which could make crude more expensive for non-US buyers.
Forecasted stronger demand in China also lifted crude prices on Tuesday. The International Energy Agency expects half of this year’s global oil demand growth to come from China, the agency’s chief said on Sunday, adding that jet fuel demand was surging.
Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for the first time in six months amid expectations of demand recovery, especially from China.
Meanwhile in Turkey, operations at a 1-million-barrel-per-day (bpd) oil export terminal in Ceyhan were halted after a major earthquake hit the region. The BTC terminal, which exports Azeri crude oil to international markets, will be closed on Feb. 6-8.
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