(Bloomberg): Oil edged lower, falling for the first time in eight sessions, as traders assessed the outlook for global demand as China resumed economic activity amid a slowdown in the rest of the global economy. .
Bloomberg’s most read articles
West Texas Intermediate fell to $79 a barrel after gaining more than 8% last week. China will lift Covid-19 restrictions in late 2022 after years of a strict lockdown. This will boost economic activity and liquidity, with analysts predicting that oil demand in the largest oil importer will likely reach record levels.
Oil got off to a rocky start to the year, crashing in the first week before rebounding. In addition to China’s quick turnaround, oil price support in recent sessions comes from rising expectations that the Federal Reserve is nearing the end of rate hikes and a weaker dollar. Traders are also tracking the impact of sanctions on Russian oil and product flows.
“China was the main commodity driver last week, but hopes of a slowdown with the Fed raising rates also boosted trader sentiment,” said James Whistler, managing director of Singapore-based brokerage Vanir Global Markets. Stated. “We’re seeing some upside, but watch out for the Lunar New Year delay,” he said, referring to next week’s nationwide break.
This week, investors will analyze market outlooks from the Organization of the Petroleum Exporting Countries and the International Energy Agency, which may highlight risks to consumption from slower growth in the US and Europe. The cartel will submit its analysis on Tuesday and the IEA will submit its analysis the next day. Additional commentary may come from the World Economic Forum in Davos.
The time spread shows a complicated picture. Brent’s immediate spread (the difference between his two most recent contracts) is in contango, a bearish pattern indicating ample near-term supply. Yet his 3-month variance in the global benchmark has an inverse backward structure.
Bloomberg Businessweek’s Most Read Articles
©2023 Bloomberg LP