NEW YORK (Reuters) – Oil prices rose more than 1% on Monday after China’s reopening of borders boosted the outlook for fuel demand and overshadowed fears of a global recession.
The rise is part of a broader boost in risk sentiment, underpinned by both the reopening of the US, the world’s largest oil importer, and hopes of easing US rate hikes. stock rise and dollar weakened.
Brent crude rose $1.08, or 1.4%, to $79.65 a barrel. US West Texas intermediate crude rose 86 cents, or 1.2%, to $74.63.
“The gradual reopening of the Chinese economy will provide additional and immeasurable price support,” said oil broker PVM’s Tamas Varga.
The rise was the biggest weekly decline to start the year since 2016, following last week’s declines of more than 8% in both oil benchmarks.
China as part of ‘new phase’ in fighting COVID-19 opened the border First weekend in 3 years. About 2 billion trips are expected within China during the Lunar New Year season, nearly double last year and 70% of his 2019 levels, according to Beijing.
In oil-focused development, China has a second batch of 2023 crude oil import quotaThis year’s total is up 20% from the same period last year, according to sources and documents seen by Reuters.
Despite Monday’s oil recovery, there remain concerns that the massive flow of Chinese tourists could trigger a further surge in COVID infections, and broader economic concerns remain.
These concerns are reflected in the structure of the oil market. Short-term contracts for both Brent crude and US crude are trading at bargain prices into the next month, a structure known as contango that typically signals bearish sentiment. ,
Meanwhile, U.S. households Lower short-term inflation The New York Federal Reserve said on Monday in its December Consumer Expectations Survey that it expects spending to decline significantly even as it expects incomes to continue to rise.
The bank reported that respondents to its monthly survey expect inflation to be 5% a year from now, down from 5.2% in November, the lowest reading since July 2021.
“New York Fed data should support oil prices as they suggest inflation has peaked,” said Phil Flynn, an analyst at Price Futures Group.
Reporting by Stephanie Kelly. Additional reporting by Alex Lawler, Noah Browning, Florence Tan, and Jeslyn Lerh. Edited by Cynthia Osterman and Lisa Shumaker
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