Oil was steady as the week’s trading kicked off, with optimism that China’s reopening will boost energy demand balanced by the prospect of slowdowns in other parts of the world.
(Bloomberg) — Oil was steady as the week’s trading kicked off, with optimism that China’s reopening will boost energy demand balanced by the prospect of slowdowns in other parts of the world.
West Texas Intermediate traded near $80 a barrel after rallying more than 8% last week. China ditched Covid-19 curbs in late 2022 after years of strict lockdowns. That’s set to improve economic activity and mobility, with analysts forecasting oil demand in the top crude importer will likely hit a record.
Crude has had a bumpy start to the year, collapsing in the opening week before rebounding. In addition to China’s swift pivot, support for crude prices in recent sessions has come from growing expectations that the Federal Reserve is now nearing an end to rate hikes, and a weakening dollar. Traders are also tracking the impact of sanctions on Russian oil and product flows.
This week, investors will dissect market outlooks from the Organization of Petroleum Exporting Countries as well as the International Energy Agency. The cartel turns in its latest analysis on Tuesday, followed by the IEA the next day.
Time spreads show a mixed picture. Brent’s prompt spread — the difference between its two nearest contracts — is in contango, a bearish pattern that indicates ample near-term supply. Still, the three-month differential for the global benchmark is in the opposite, backwardated structure.
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