Oil pared an earlier drop as investors weighed the prospect for further US monetary tightening against signs of improving demand from China following the end of Covid Zero.
(Bloomberg) — Oil pared an earlier drop as investors weighed the prospect for further US monetary tightening against signs of improving demand from China following the end of Covid Zero.
Brent futures traded near $84 a barrel, after being down as much as 1.7% at one point. Prices have bounced within a relatively tight range this year, and a measure of volatility remains near the lowest level in 13 months.
Market watchers continue to weigh concerns that more Federal Reserve interest-rate hikes will sap demand, against expectations that China’s reopening will drive an increase in commodity buying. The world’s largest importer has been buying more oil from Russia and snapping up ships for cargoes from the US as it ramps up purchases.
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“The oil market remains very uncertain, but I think the biggest surprise over the last year is Russian exports of crude haven’t changed,” Spencer Dale, chief economist at BP Plc said in a Bloomberg TV interview, adding that they have instead been redirected to new buyers.
“In the near-term, everybody has been surprised by the pace at which China’s relaxation of Covid policies happened and so revised up their views of oil demand growth this year,” said Dale.
Indian refiners have also boosted processing, lifting rates in January to the highest in five years on the back of rising domestic demand. The country has been a key consumer of Russian crude, taking advantage of discounted cargoes.
The next key event that investors are awaiting is Wednesday’s release of minutes from the Fed’s last meeting. That, and US personal spending data on Friday, may provide further clues of the path for rates.
Other news:
- Chinese and Global Oil Demand Nearing ‘Last Hurrah,’ Citi Says
- Estonia Calls for Additional Measures to Cap Russian Oil and LNG
- French Road Fuel Sales Climbed in January Even as Prices Rose
- Russian Oil Exports Surge With Days to Go Until Cuts Begin
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