Global crude oil prices started looking up with opening of the week just as China reopened its borders, spurring optimism among analysts that the country was truly exiting its Covid-related self-isolation.
A report yesterday said the optimism pushed both Brent crude and West Texas Intermediate up by more than a percentage point in morning Asian trade yesterday, although both remained below $80 per barrel at the time of filing the report.
“Crude oil prices recovered from the previous week’s losses as the economic reopening in China and less aggressive monetary tightening prospects from the Federal Reserve set a positive tone for demand recovery,” Reuters quoted a Phillip Future analyst as saying.
Other analysts have been issuing bullish outlooks for the whole year in oil. “Within commodity sectors we like energy the best and suspect that oil prices are on track for another positive year, driven by production challenges and strategic opportunities in large oil-producing countries,” the head of global real asset strategy at Wells Fargo, John LaForge, told TheStreet.
The report said there seem to be good reason for recession as the main bearish factor, while China’s reopening continues to be the main bullish factor for oil.
The EU’s core inflation hit record high at the end of 2022, while the U.S. Fed continues its aggressive inflation-taming approach.
If a recession indeed hits enough countries, oil prices could dip to $60 per barrel, according to energy economist Bernard Weinstein, who spoke to TheStreet.
At the same time, however, OPEC+ is keeping its finger on the pulse of the oil market and stands ready to tweak production again to avoid this happening. Even so, the cartel said in its latest monthly oil market report it expected higher oil demand this year than last year.
It would be recalled that oil prices began the new year with a slump as traders focused on China’s Covid developments and general recession worry.