Oil rises on hopes for China’s economy

Oil prices rose on Monday, as optimism around China relaxing its Covid-19 restrictions outweighed fears of a global recession that would weigh on energy demand.

China, the world’s top crude oil importer, is experiencing its first of three expected waves of Covid-19 cases, after Beijing relaxed mobility restrictions but said it plans to step up support for the economy in 2023.

“There is no doubt that demand is being adversely influenced,” said Naeem Aslam, analyst at brokerage Avatrade. “However, not everything is so negative as China has vowed to fight all pessimism about its economy, and it will do what it takes to boost economic growth.”

Brent crude gained 96 cents to $80 a barrel by 1756 GMT while US West Texas Intermediate crude rose $1.23 to $75.52. Prices pared gains earlier before rising again in a volatile session.

“The reality here is that we still have a fear of a great recession looming on the horizon that has not gone away,” said Bob Yawger, Director of Energy Futures at Mizuho. “It’s going to be difficult to make big gains here.”

Oil surged towards its record high of $147 a barrel earlier in the year after Russia invaded Ukraine in February. It has since unwound most of this year’s gains as supply concerns were edged out by recession fears.

European Union energy ministers on Monday agreed to a gas price cap, after weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis.

Published in The Express Tribune, December 20^th, 2022.

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