Crude oil prices are about to end this week with another gain, currently sitting at 88.50 dollars per barrel compared to 86.13 on Tuesday. During the week, there has been a fall followed by a rise, the rise of which has been driven by optimism about an economic rebound in China, where oil demand certainly seems to be the catalyst for the upward movement in prices during January.
In China, daily deaths among COVID-19 patients in hospitals have dropped 79% from their peak and critically ill COVID-19 cases are down 72% from a peak earlier in the month. This points to a normalisation of the Chinese economy and raises hopes of a recovery in its demand for oil.
“Oil markets were boosted by broad optimism on the first day of the return of Chinese stock markets as China's reopening still plays a main role in boosting the demand outlook,” said Tina Teng, an analyst at CMC Markets.
On the bearish side, there are continued signs of weakness in the global economy. The latest updates include a drop in retail sales that suggests both that inflation remains problematic and the likelihood that the U.S. manufacturing sector entered a recession in the final quarter of 2022.
However, next week’s focus will no doubt be on OPEC+, who will meet virtually on Wednesday to review crude production levels, amid steady support for crude prices from strong demand for jet fuel and diesel. The U.S. Federal Reserve will also decide on another rate hike as inflation cools and gross domestic product improves.
