Oil Prices Increase as Reopening of China helps Demand

Oil Prices Increase as Reopening of China helps Demand

Oil Prices Increase as Reopening of China helps Demand

The price of oil began this week in a strong tone because the removal of COVID lockdowns in the big city of China increased optimism for the recovery of demand in the largest crude oil importer in the world.

Chengdu-The Chinese megacity – which was the largest city to face COVID lockdowns after Shanghai earlier this year – is started reducing a two-week lockdown from Monday. This decision should stimulate economic activity in the city, the resumption of public and private transport probably contributing to the demand for fuel.

Oil prices have dropped from peaks affected earlier this year, while lockdowns in China, associated with the increase in inflation and interest rates, seriously distorted demand prospects this year. China’s demand in particular suffered greatly because industrial production was stopped in several main hubs.

Supply was caused by a constant reduction in the strategic oil reserve of the United States, and Russia’s offer increases also withdrew the prices of the annual maximums.

Crude Price

Brent Oil Futures rose 1% to $ 92.50 per barrel, while US WTI Futures rose 1.2% to $ 85.81 per barrel at 20:49 et (00:49 GMT). Both contracts recovered from three consecutive weeks of losses, in the midst of concerns over the possibility of a global recession.

Main Focus

The focus of this week is at the US Federal Reserve meeting, where the central bank is widely expected to increase the rates by 75 basis points and indicate more pressure to come. This step is also expected after US inflation data is read higher than expected in August, showing that inflationary pressures in this country have not yet been facilitated.

Both of these factors are determined to greatly burden economic growth, potentially injuring crude demand in the country. They are also expected to increase dollars, making expensive crude oil for overseas importers.

Oil prices fell sharply last week after reading American inflation, while speculation on the increase in Russian supply has also weighed.

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Winter May Rise Crude Demand More

However, global oil demand should benefit during the winter, with the high prices of natural gas growing more countries adopt oil for heating purposes.

Fuel demand in the United States has also shown resilience this year and is expected to remain stable in the coming months.

Oil Prices Increase as Reopening of China helps Demand