China’s economy is a strong factor in the oil demand and now that it is starting to pick up pace again the demand for oil should increase. US WTI crude oil retreated after the surge early in March and it fell below $100, although with the ongoing conflict in Ukraine crude oil remains bullish.

The EU said to be following the US and start applying tariffs on Russian Oil, which was another factor for the bullish reversal in crude oil last week. Now, the GDP figures from China show the first acceleration in the economy since the coronavirus pandemic started. Lockdowns are still going on there, but it is not affecting the economy much now. So, crude oil remains bullish today although let’s see if it can climb above $110.”

US Crude Oil Daily Chart – WTI Moves Above the 50 SMA

Is the bullish trend resuming for oil?

China Q1 2022 GDP Report

• Q1 2022 GDP QoQ +1.3% vs 0.6% expected
• Q4 2021 GDP was 1.6%
• GDP YoY +4.8% vs 4.4% expected
• Prior GDP YoY was 4.0%

Industrial Production Report

• Industrial production YoY +5.0% vs 4.5% expected
• Prior industrial production YoY was 7.5%
• Production YTD +6.5% vs +7.5% prior

Retail Sales Report

• Retail sales YoY -3.5% (lockdowns impacting) vs -1.6% expected
• Prior sales were 6.7%
• Retail sales YTD +3.27%, vs. prior +6.72%
• Fixed asset investment +9.3% vs 8.5% expected
• Prior fixed asset investment was 12.2%
• March unemployment rate 5.8%
• February unemployment rate was 5.5%

This March data has been impacted by lockdowns in various areas during the month, most notably in Shanghai. This is China’s largest city and a central powerhouse of the country’s economy. China’s National Bureau of Statistics acknowledged the difficulties facing the economy in the month:

• “We must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, the economic development is facing significant difficulties and challenges”
• “We must coordinate the efforts of Covid-19 prevention and control and economic and social development, make economic stability our top priority and pursue progress while ensuring stability, and put the task of ensuring stable growth in an even more prominent position”

And also held out the carrot of more support:

• The recovery continues with operations stable
• China will give economic growth stability a higher priority