By Ambar Warrick
Investing.com -- Oil prices rose to multi-week highs on Tuesday as bets on a strong economic rebound in China were furthered by better-than-expected trade data, although anticipation of a testimony by Federal Reserve Chair Jerome Powell kept broader sentiment muted.
China logged a record trade surplus in February, with exports shrinking less than expected as the country's manufacturing sector rebounded from pandemic-era lows. A robust trade balance bodes well for China's overall economy, and is likely to spur growth in the coming months.
But local demand in China still showed no signs of recovery, with imports shrinking far more than expected in February. The trend could indicate a somewhat staggered recovery in the world's largest oil importer.
Brent oil futures rose 0.3% to a five-week high of $86.42 a barrel, while West Texas Intermediate crude futures rose 0.3% to a three-week high of $80.67 a barrel by 23:47 ET (04:47 GMT). Both contracts closed higher in choppy trade on Monday.
Both contracts were also set for a sixth straight session of gains, and were now trading slightly positive for the year.
While crude prices were initially dented by a softer-than-expected Chinese GDP forecast for the year, predictions from major producers that U.S. oil output had peaked helped prices gain later in the session on Monday.
Oil bulls were also cheered by Goldman Sachs reiterating that prices are likely to crack $100 this year, amid tightening U.S. supplies and a recovery in Chinese demand.
But while a recovery in Chinese consumption is expected to drive oil demand to record highs this year, markets are concerned that slowing economic growth in the rest of the world, particularly as interest rates keep rising, could offset this trend.
A testimony by Fed Chair Jerome Powell is squarely in focus on Tuesday for more cues on U.S. monetary policy and how far rates will rise. While recent inflation data proved to be more stubborn than expected, other economic indicators showed that U.S. growth was somewhat cooling, which could signal a bigger slowdown later this year.
Focus this week is also on the U.S. nonfarm payrolls report for February, with any resilience in the jobs market giving the Fed more economic headroom to keep raising rates.
Rising interest rates weighed heavily on crude markets in 2022, and have kept oil prices trading within a tight range so far this year.