Oil rose for a sixth day amid a spate of Chinese crude purchases as traders digested US inflation figures that matched expectations.

West Texas Intermediate rose above US$78 a barrel and was heading for the longest run of daily gains since February. The dollar slipped after US consumer prices fell 0.1 per cent in December, a report that broadly matched analyst expectations. Federal Reserve official Patrick Harker said he supports 25-basis point rate hikes going forward, a slowdown from recent levels.

China’s crude buying after Beijing issued a bumper batch of import quota this week is adding bullish sentiment about demand. The country has stepped up purchases of U.S. and West African crudes in recent days. 

“The month-on-month inflation data will be encouraging for oil bulls, as we see cause for further dollar weakening that would create more favorable buying conditions in physical markets,” said Harry Altham, an analyst at brokerage StoneX Group.

Oil’s recent push higher gathered steam after a rocky start to the year amid fears over a global economic slowdown. Still, many analysts remain bullish on the longer term outlook. Goldman Sachs Group Inc. said on Wednesday that it expects crude to hit US$110 by the third quarter as China’s economy reopens, while Morgan Stanley sees a tighter second half to the year.

Prices:

• WTI for February delivery rose 1.9 per cent to US$78.87 a barrel at 8:50 a.m. in New York.
• Brent for March was 1.9 per cent higher at US$84.22

There are also tentative signs that trading activity has picked up in the new year. Open interest across the main oil futures contracts this week climbed to the highest level since October. Low levels of futures holdings has been one driver of oil market volatility in recent months.