By Adedapo Adesanya
The prices of crude oil moved in varying directions on Monday despite optimism about a possible recovery in demand from top oil importer, China, as the economy recovers this year from pandemic lockdowns.
Brent crude settled 56 cents higher at $88.19 a barrel, while the United States West Texas Intermediate (WTI) crude settled 2 cents lower at $81.62 a barrel.
The Chinese reopening is set to drive oil demand growth and push oil higher if most of the developed economies manage to avoid recessions, analysts say.
The Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) said in their respective monthly reports this week that the prospects of global oil demand were improving thanks to the Chinese exit from the ‘zero Covid’ policy.
China’s reopening is set to drive global oil demand to a record high of 101.7 million barrels per day this year, up by 1.9 million barrels per day from 2022, the IEA said in its report, raising its demand growth estimate for 2023 by 200,000 barrels per day from 1.7 million barrels per day growth expected in December.
OPEC also expressed more optimism about Chinese oil demand and the global economy this year in its Monthly Oil Market Report (MOMR).
China’s reopening is set to push demand higher, and “In addition, China’s plans to expand fiscal spending to aid the economic recovery is likely to support oil demand in manufacturing, construction and mobility,” OPEC said.
Regardless, analysts said the market wants to preserve long positions in case Chinese growth resumes.
The European Union and Group of Seven (G7) coalition will cap prices of refined Russian products from February 5, in addition to the 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 provide time to assess the impact of the oil product’s price cap.
