Where the price of oil fluctuated more than once in the last week, stability now seems to have been found. Previously, investors were still concerned about demand from China, which could lead to a global slowdown and thus reduce oil demand. This writes Bloomberg.
A barrel of West Texas Intermediate oil traded around $80 today, after falling 1.8% yesterday. This was the result of mixed business results and less activity in view of the US economy. While demand for Chinese oil is expected to pick up even more now that all covid measures have been lifted, there is also little to say about the strength of the rebound.
Crude oil prices remained relatively stable in January after a weak start to 2023. That weak start is due to fears of a recession, which still grip the market. The fact that demand for oil from China is slowly recovering and a weaker dollar – which makes commodities quoted in that currency even more attractive – has helped oil recover.
Even more uncertainty
However, that doesn’t mean the uncertainty is gone, as sanctions and price caps on Russian petroleum products due to come into effect next month look certain that oil prices will fluctuate again. Especially in combination with the closure of several oil refineries in the northern US due to the cold.
For now everything seems to have settled down, as Ole Sloth Hansen of Standard Chartered also sees. “After Brent had some resistance around $90 a barrel, markets now appear to have calmed down,” he says.