(Updated 11.15 with news of IEA’s oil market outlook)

Oil prices see slight gains on optimism concerning China’s return to normalcy following the Covid-19 crisis. This return is expected to come with increased oil demand from China, the biggest importer of oil in the world.

A barrel of European reference crude Brent trades for USD 86.65 against USD 86.03 Tuesday afternoon. Meanwhile, US benchmark West Texas Intermediate costs USD 80.91 per barrel against USD 80.52 Tuesday afternoon.

Economic growth in China slid to 3.0% in 2022, the second-lowest level since 1976. Analysts project economic growth to reach 4.9% in 2023, according to Reuters. China’s oil market re-entry are thought to bring prices up as investors expect higher demand from China.

In a monthly report, the Organization of Petroleum Exporting Countries notes that demand from China will increase by 510,000 barrels of crude per day this year after shrinking in 2022, a first in many years, as a result of Covid-19 lockdown measures.

OPEC projects global demand to increase by 2.2 million bpd.

”OPEC’s optimistic outlook on China’s demand also supported the market sentiment,” says Fujitomi Securities Co Ltd analyst Toshitaka Tazawa.

The price increase is also spurred by an expected drop in US crude oil stockpiles by around 1.8 million barrels, according to Reuters poll.

Western sanctions could also have a significant impact on Russian exports, leaving more crude available, says Russian source to Reuters.

The International Energy Agency has released a report on demand projections showing that the oil market faces a surplus, according to Bloomberg News.

”As China faces a challenging winter, its exit path will unquestionably be bumpy and drawn-out,” writes the IEA in the report:

”Hardship and disruptions therefore look set to prevail in the near-term.”