The price of a barrel of oil rose globally by more than 1%, at the close of trading today, Monday, January 9 (2023), to continue its rise for the third consecutive session, amid hopes for a recovery in demand.
This comes with the reopening of borders in China, the world’s largest importer of crude; This boosted expectations of growth in fuel demand and offsetting global recession fears.
The global price of a barrel of oil today
At the end of trading, the prices of benchmark Brent crude futures – for delivery in March 2023 – rose by about 1.4%, to $79.65 a barrel.
The price of US West Texas crude futures – for February delivery 2023 – rose by 1.2%, to $74.63 a barrel, according to data viewed by the specialized energy platform.
And crude oil prices ended their dealings, on Friday, January 6, 2023, with a difference; US crude rose, while Brent crude fell.
During the past week, Brent and West Texas Intermediate crude prices recorded weekly losses of about 8.5% and 8.1%, respectively.
Oil market conditions
Hopes for less sharp increases in US interest rates are buoying financial markets and depressing the dollar.
A weaker US currency usually makes dollar-denominated commodities more accessible to investors who hold other currencies.
“The price of a barrel of oil has recovered globally from last week’s losses as China’s economic reopening and less aggressive monetary policy expectations from the Federal Reserve set a positive tone for demand recovery,” said Avtar Sandu, senior director of commodities at Phillip Futures.
As part of a “new phase” in the fight against Corona, China opened its borders over the weekend for the first time in 3 years.
Chinese demand
Domestically, the number of trips is expected to reach two billion during the Lunar New Year season. That’s nearly double last year’s move, and has recovered to 70% of 2019 levels, Beijing says.
Over the past week, airlines increased their January international seat capacity to and from China by 9.5% as flights increased following the opening of their borders.
Despite the gains in oil, today, Monday; There are still concerns that the massive influx of Chinese travelers could cause a further surge in COVID-19 cases, while broader economic concerns remain.
These concerns are reflected in the market structure of the benchmark oil futures contract. Both Brent and WTI contracts are subject to the nearest maturity month, when the current prices are lower than the prices of the contracts for subsequent delivery; This usually indicates a downward trend in the market.
Oil price forecast
Serena Huang, Head of Asia Pacific at Vortexa, said: “The price of a barrel of oil is likely to rise globally due to increased confidence in China’s reopening, but fears of a recession in the broader global market remain.
She added, “It is likely that this uncertainty will lead to fluctuations in oil prices in the near term,” according to Reuters.
Energy futures for crude oil, refined products and natural gas fell in the new year; Traders reconsidered their near-term concerns about cold weather, concerns about supply shortages and dumping contracts.
Baker Hughes Energy Services said, on Friday, that US energy companies reduced, last week, the number of oil and natural gas platforms operating by about 7 platforms, which is the largest weekly decline since September 2021.
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