Oil prices are rising due to opening of China
2023.01.09 14:25
Oil prices are rising due to opening of China
By Ray Johnson
Budrigannews.com – Crude oil prices increased by approximately 2% on Monday, following the worst week in a month to start the new year. Market participants believe that China’s reopening of its economy from its strict COVID policies will increase oil consumption.
After reaching a session high of $76.72, New York-traded WTI crude was up 98 cents, or 1.3%, to $74.75 per barrel at 14:00 ET (19:00 GMT).
The benchmark for U.S. crude fell by more than 8% last week, making it the worst week since Dec. 2. The poor performance followed WTI’s 10% drop on Tuesday and Wednesday, the worst first two days of oil trading since 1991.
After reaching an intraday high of $78.42, London-traded crude was up 92 cents, or 1.2 percent, to $79.49 per barrel. Brent lost more than 8% last week, just like WTI.
After China completely reopened its borders to international trade on Monday to get rid of the last remnants of the draconian COVID rules that have shaped a lot of its social policies over the past three years, crude rebounded.
After the Lunar New Year, which falls at the end of January this year, oil demand typically rises in China. However, Beijing’s oil demand is yet to be determined as it shifts from a COVID-zero to a “COVID-anything” policy. Last week, data revealed that manufacturing activity in China decreased for a fifth consecutive month in December as the nation dealt with an unprecedented rise in coronavirus cases.
Despite this, Beijing is insisting on its reopening with fervor. Officials have stated that they anticipate approximately 2 billion domestic trips during the Lunar New Year season, nearly double last year’s total and 70% of 2019’s.
According to sources and documents reviewed by Reuters, China also issued a second batch of 2023 crude import quotas, increasing the total for this year by 20% from the same time last year.
Ed Moya, an analyst at the online trading platform OANDA, stated, “Oil’s downward trend was approaching critical support, so energy traders were eagerly looking for any reason to jump back into the oil trade.” Oil prices could rise significantly as a result of Chinese hopes for a better COVID reopening.
