Oil rose after a weekly loss on hopes that a Chinese demand rebound is picking up pace following the end of Covid Zero, outweighing hawkish signals from the Federal Reserve.
Brent climbed toward $84 a barrel, while US futures snapped the longest run of daily declines this year. Signs are emerging of a recovery in Chinese oil demand, although the prospect of further monetary tightening from the Fed to combat inflation is keeping a lid on crude prices.
See also: Commodities Demand Signals in China Are Starting to Pick Up
Oil has endured a bumpy start to 2023 as investors juggle persistent concerns over a global economic slowdown and optimism around China’s reopening. The fallout from sanctions on Russian energy and the rerouting of global flows has added another element of uncertainty to the global market.
“Crude oil rebounded during Asian hours following last week’s selloff, which once again confirmed the market remains rangebound,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. The demand pickup in China is so far failing to offset a hawkish outlook from the Fed, he said.
The US plans to impose new export controls and fresh sanctions on Russia, targeting key industries a year after the invasion of Ukraine. The measures will target the nation’s defense and energy sectors, financial institutions and several individuals, according to people familiar with the matter.
WTI for March delivery, which expires on Tuesday, gained 0.8% to $76.92 a barrel as of 10:18 a.m. in London. Trading may be thin due to a US holiday.
Brent for April settlement climbed 0.8% to $83.66 a barrel.