After falling by about 8% last week to more than three-week lows due to concerns over major economies, oil prices gradually increased in early trade on Monday. China, the world’s top oil importer, was the main cause of this decline.
At 00:22 GMT, Brent crude futures slid up 16 cents, or 0.02 percent, to $80.10 per barrel, while US West Texas Intermediate (WTI) crude futures climbed 15 cents, or 0.02 percent, higher to $73.54 per barrel.
Last Friday, WTI and Brent fell by 3 percent as a result of worries that the Federal Reserve would keep raising interest rates due to positive US jobs data, which in turn helped the dollar.
While recession worries dominated the market the previous week, the International Energy Agency’s (IEA) Executive Director Fatih Birol emphasized on Sunday that China’s recovery is still a major factor in oil prices.
According to the IEA, China will account for half of the increase in global oil demand this year, which is in line with Birol’s assertion that jet fuel demand is rising in China.
The Organisation of Petroleum Exporting Countries (Opec) and its allies, collectively known as Opec, may have to reevaluate their decision to cut output by two million barrels per day through 2023, according to him, depending on how robust that recovery is.
“The Opec countries will need to look at their (output) policies, in my opinion,” Birol told Reuters on the sidelines of a conference in India. “If demand goes up very strongly and if the Chinese economy recovers.”.
On Sunday, price controls on Russian goods went into effect. The Group of Seven (G7), the European Union, and Australia reached agreements on price caps of $100 per barrel for diesel and other products that trade at a premium to crude and $45 per barrel for products that trade at a discount, like fuel oil.
In a client note, ANZ analysts stated that the market currently anticipates non-EU nations will increase their imports of refined Russian crude, minimally disrupting overall supplies.
However, they continued, “Opec’s continued restraint on supply should keep the market tight.”.
