Melbourne, Feb. 6 (BNA): Oil prices rose slightly on Monday, after falling 8% last week to their lowest in more than three weeks, as concerns that slowing growth in major economies could curb fuel consumption outweighed signs of a recovery in demand in China. . The largest importer of oil in the world.
Brent crude futures rose 19 cents, or 0.2%, to $80.13 a barrel by 0502 GMT, while US West Texas Intermediate crude futures rose 9 cents, or 0.1%, to $73.48 a barrel, Reuters reported.
Last Friday, WTI and Brent crude fell 3% after strong US jobs data raised concerns that the Federal Reserve would continue to raise interest rates, which in turn boosted the dollar. A strong dollar usually reduces demand for dollar-denominated oil from buyers who pay in other currencies.
While recession fears dominated the market last week, Fatih Birol, Executive Director of the International Energy Agency, stressed on Sunday that China’s recovery remains a major driver of oil prices.
The International Energy Agency expects half of global oil demand growth this year to come from China, where Birol said demand for jet fuel is on the rise.
He said that depending on how strong this recovery is, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively called OPEC+, may have to reassess their decision to cut production by two million barrels per day until 2023.
“If demand rises very strongly, if the Chinese economy recovers, then, in my opinion, there will be a need for OPEC+ countries to look at their (production) policies,” Birol told Reuters on the sidelines of a conference in India. .
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However, higher interest rates sustain further gains in prices, as they are likely to curb economic growth and fuel demand increases, analysts say.
“We don’t see any significant evidence of a recovery in domestic demand in China yet, although the mobility figures are encouraging. Thus, concerns about central bank rate hikes and interest rate hikes for a longer period remain the main drag on oil prices after declining by more than 7%. Last week, Sophru Sakar, Principal Energy Analyst at DBS Bank said:
“It’s not an axiom that good jobs data could cause a collapse in oil prices, but that’s the volatility of the market right now.”
Russian product price caps also went into effect on Sunday, with the G7, the European Union and Australia agreeing to a cap of $100 per barrel on diesel and other products traded at a premium over crude oil, and $45 per barrel. Products that are traded at a discount, such as fuel oil.
“Currently, the market expects non-EU countries to increase imports of refined Russian crude, which will lead to a slight disruption to overall supplies,” ANZ analysts said in a note to clients.
“However, continued OPEC supply restrictions should keep the market tight,” they said.
The Saudi energy minister also warned over the weekend that sanctions and a lack of investment in the energy sector could lead to energy shortages.