Renewed hopes of China’s increased crude consumption boosted oil alongside a weaker dollar at the start of the week.
(Bloomberg) — Renewed hopes of China’s increased crude consumption boosted oil alongside a weaker dollar at the start of the week.
West Texas Intermediate futures surged as much as 4% to above $76 a barrel Monday before paring gains. China issued a fresh batch of crude oil import quotas, a signal that the world’s largest purchaser is gearing up to meet higher demand. Meanwhile, the dollar continues to weaken with investors betting the Federal Reserve is leaning toward smaller interest-rate increases, boosting commodities priced in the currency.
This week also marks the beginning of the annual rebalancing of the largest commodity indexes, a period usually characterized by volatile flows across raw materials markets. The period should see more than $1 billion of inflows into the global Brent benchmark, while leading to outflows from WTI, according to separate estimates from Citigroup Inc. and Societe Generale SA.
Crude had a sluggish start to the year, posting a drop of around 8% last week as nearby oil markers flash signs of weakness. For now traders are awaiting signs of a meaningful uptick in Chinese demand, though there has been improvement in mobility gauges over recent days.
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