Oil prices decline with weakly volatile trading
2023.01.23 03:56
Oil prices decline with weakly volatile trading
By Ray Johnson
Budrigannews.com – Although Asian trading volumes were low due to a slew of market holidays in the region, oil prices edged lower from a recent rally on Monday as traders awaited additional clues on an economic recovery in China and a potential recession in the United States.
Due to the Lunar New Year holiday, China and other major Asian markets were closed, which is expected to keep volumes low for the remainder of the week.
Despite this, markets are expecting a significant boost to the Chinese economy from the holiday, which will last for a week. This is especially true given that China has reopened its international borders this year and withdrew most anti-COVID measures.
Oil prices have risen in recent weeks in anticipation of a recovery in Chinese demand, and major industry organizations have also predicted a significant increase in demand this year as China reopens.
However, markets remain uncertain regarding the timing of such a recovery due to the fact that the nation is also dealing with the worst COVID-19 outbreak in its history.
in early Asian trade, fell 0.5 percent to $87.25 a barrel and 0.4 percent to $81.31 a barrel. After a second week of gains, both contracts were up.
This week, the focus shifts to U.S. data due on Thursday to determine whether the world’s largest economy is on the verge of a recession by the end of 2022. As the economy felt the effects of a sharp rise in interest rates, growth is expected to have slowed down in the fourth quarter from the third.
Markets are concerned that a possible recession in the United States and other Western majors could hinder crude consumption, despite the fact that a recovery in China is anticipated to benefit crude demand this year. The economies of the United States and the Eurozone are experiencing difficulties as a result of elevated inflation and tight monetary policy, both of which are anticipated to last for the majority of the year.
Already, economic indicators for December show a decline in activity, likely signaling a larger downturn in the months to come.
Russia is the primary focus on the supply side as the nation contends with strict price caps on its oil exports. Since its margins are being impacted by lower selling prices, Moscow is widely anticipated to reduce its crude production.
As a result, prices may rise slightly as the global crude supply becomes more constrained.
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