Oil prices declining due to fears of decline in demand
2023.01.16 01:20
Oil prices declining due to fears of decline in demand
By Kristina Sobol
Budrigannews.com – After a sharp rally the previous week, oil prices dropped on Monday as traders turned cautious and locked in some profits ahead of demand forecasts from OPEC and the IEA and a slew of economic data due this week.
After China reopened its borders and essentially confirmed a shift away from its strict zero-COVID policy, crude prices surged by over 8% last week on the expectation of a rebound in Chinese demand. Oil prices also benefited from weakness in the despite signs of slowing inflation in the country.
The OPEC’s monthly report, due on Tuesday, is now the primary focus. In the face of a Chinese economic recovery, markets are waiting to see if the cartel will alter its forecasts for global demand.
in early Asian trade, fell 0.6 percent to $79.67 a barrel and 0.5% to 85.09 a barrel, respectively. Monday’s U.S. holiday is expected to have a limited impact on market activity.
Additionally, traders are looking forward to the IEA’s outlook on oil prices and demand for the year in a report on crude markets that is due on Wednesday.
Crude markets are also anticipating a slew of economic data and central bank meetings this week in addition to data from industry bodies.
After the lender unexpectedly struck a hawkish chord at its December meeting, a move that rattled financial markets, the monetary policy meeting is important to markets.
Data on the United States,, and are also in focus, as are inflation readings from and.
In light of growing concerns about a recession in 2023, markets will keep an eye out for any indications of a slowdown in economic growth. As the International Monetary Fund warned of a possible recession this year, oil prices had fallen in the first week of the year.
Traders are concerned that slowing global economic growth will have an effect on oil demand, which has largely limited any upside in crude markets.
Despite the fact that Chinese demand has shown some signs of improvement, the country is also dealing with its worst COVID-19 outbreak to date, which the market is concerned could hold up a more substantial economic recovery.
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