Analysts say optimism about China’s reopening will most likely drive oil prices higher
23 January 2023 - 14:06
byRon Bousso
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The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France. Picture: CHRISTIAN HARTMANN/REUTERS
London — Oil prices rose on Monday to $88 a barrel, extending last week’s gains as a result of a stronger outlook due to an expected economic recovery in top oil importer China in 2023.
Brent crude was up 42c, or 0.48%, to $88.05 at 10.25am GMT, while West Texas Intermediate (WTI) US crude rose 33c, or 0.4%, to $81.97 a barrel.
Last week, Brent rose 2.8%, while the US benchmark logged a 1.8% gain.
Asian trading was slower due to the Lunar New Year holiday, but analysts said that optimism regarding China’s reopening will most likely drive oil prices higher.
Sukrit Vijayakar, director of energy consultancy Trifecta in Mumbai, said the market wants to preserve long positions in case China growth resumes.
Data shows a solid pick-up in travel in China after Covid-19 curbs were eased, ANZ commodity analysts said in a note, pointing to a 22% jump in road traffic congestion so far this month vs a year earlier in the country's 15 key cities.
International Energy Agency head Fatih Birol on Friday said energy markets could tighten in 2023 if the Chinese economy rebounds in the way financial institutions expect.
“I wouldn’t be too relaxed about the markets, and 2023 may well be a year where we see tighter markets than some colleagues may think,” Birol told Reuters, speaking on the sidelines of the World Economic Forum annual meeting in Davos.
The jump in China’s traffic ahead of the Lunar New Year holiday bodes well for fuel demand after the two-week vacation.
“The expected surge in demand comes as the market braces for further sanctions on Russian oil,” ANZ analysts said.
The EU and Group of Seven (G7) coalition will cap prices of Russian refined products starting on February 5, in addition to their price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.
The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to give time to assess the effects of the oil products price cap.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil continues last week’s gains
Analysts say optimism about China’s reopening will most likely drive oil prices higher
London — Oil prices rose on Monday to $88 a barrel, extending last week’s gains as a result of a stronger outlook due to an expected economic recovery in top oil importer China in 2023.
Brent crude was up 42c, or 0.48%, to $88.05 at 10.25am GMT, while West Texas Intermediate (WTI) US crude rose 33c, or 0.4%, to $81.97 a barrel.
Last week, Brent rose 2.8%, while the US benchmark logged a 1.8% gain.
Asian trading was slower due to the Lunar New Year holiday, but analysts said that optimism regarding China’s reopening will most likely drive oil prices higher.
Sukrit Vijayakar, director of energy consultancy Trifecta in Mumbai, said the market wants to preserve long positions in case China growth resumes.
Data shows a solid pick-up in travel in China after Covid-19 curbs were eased, ANZ commodity analysts said in a note, pointing to a 22% jump in road traffic congestion so far this month vs a year earlier in the country's 15 key cities.
International Energy Agency head Fatih Birol on Friday said energy markets could tighten in 2023 if the Chinese economy rebounds in the way financial institutions expect.
“I wouldn’t be too relaxed about the markets, and 2023 may well be a year where we see tighter markets than some colleagues may think,” Birol told Reuters, speaking on the sidelines of the World Economic Forum annual meeting in Davos.
The jump in China’s traffic ahead of the Lunar New Year holiday bodes well for fuel demand after the two-week vacation.
“The expected surge in demand comes as the market braces for further sanctions on Russian oil,” ANZ analysts said.
The EU and Group of Seven (G7) coalition will cap prices of Russian refined products starting on February 5, in addition to their price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.
The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to give time to assess the effects of the oil products price cap.
Reuters
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