Despite easing COVID restrictions in China, the price of Brent crude fell below $85 per barrel on Monday, raising hopes of a demand recovery in the world’s top crude importer.
The international global benchmark crude fell $1.08, or 1.3 percent, to $84.20 per barrel yesterday, while the West Texas Intermediate (WTI) fell $1.01, or 1.3 percent, to $78.85 per barrel in honor of Martin Luther King Day.
The market’s losses yesterday were a reversal of fortunes after the two grades of crude oil rose more than 8% last week for the biggest weekly gains since October after China abandoned what remained of its zero-COVID policy by reopening its borders on January 8.
Another piece of good news was the expected increase in travel for the Lunar New Year holiday at the end of the week, which improved the outlook for transportation fuel demand.
This will help China’s crude oil imports, which fell for the second year in a row in 2022, despite a surge in purchases in the fourth quarter.
According to data from the General Administration of Customs, the world’s top buyer imported 508.28 million tonnes, or 10.17 million barrels per day, for the entire year, 0.9% less than in 2021.
Mr. Suhail al-Mazrouei, the UAE’s energy minister, stated on Monday that oil markets were balanced.
On the sidelines of the Global Energy Forum in Abu Dhabi, the minister reaffirmed the UAE’s commitment to providing the necessary support to ensure a balanced oil market, in line with the country’s plan to push the 5 million barrels per day production target to 2027.
He went on to say that geopolitical factors in the region and around the world influence the global energy map, and he expressed hope that the current year 2023 would see more stability in the energy markets, as well as a decrease in gas prices and volatility.
Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) will release their monthly reports this week, which will be closely watched for clues on the global demand and supply outlook.
Investors will also be watching the World Economic Forum, which began on Monday in Davos, Switzerland, and a Bank of Japan meeting this week to see if it will defend its large stimulus policy.
