NEW YORK, Jan 9 (Reuters) – Oil prices rose more than 1% on Monday after China’s move to reopen its borders boosted forecasts for fuel demand and overshadowed global recession concerns.
The rally was part of a broader push for risk sentiment, supported by both the reopening of the world’s largest crude oil importer and hopes for less aggressive increases in US interest rates. stocks rising and dollars weakening.
Brent crude was up $1.29, or 1.6%, at $79.80 a barrel at 1:29 p.m. EST (1829 GMT). US West Texas Intermediate crude oil rose $1.32, gold rose 1.8% to $75.09 a ton.
“The gradual reopening of the Chinese economy will provide an additional and immeasurable layer of price support,” said Tamas Varga of oil broker PVM.
The rally followed losses of more than 8% for both oil benchmarks last week, their biggest weekly declines since 2016.
China as part of a “new phase” in the fight against COVID-19 opened its borders weekend for the first time in three years. Beijing says nearly 2 billion domestic trips are expected during the Lunar New Year season, double last year and 70% of 2019 levels.
China has released its second batch of oil developments 2023 crude oil quotasThe total for this year is a 20% increase compared to the same period last year, according to sources and documents reviewed by Reuters.
Despite oil’s recovery on Monday, there is still concern that the massive influx of Chinese travelers could lead to another spike in COVID infections, while broader economic concerns persist.
These concerns are reflected in the market structure of oil. Both the near-term Brent and US crude oil contracts are typically traded at a discount to the next month, a structure known as contango that indicates bearish sentiment. ,
Meanwhile, U.S. households see near-term inflation as weak and expect to spend significantly less, even as incomes are projected to continue rising, the New York Federal Reserve said in its Survey of Consumer Expectations on Monday. read more
Respondents to its monthly survey said they saw inflation at 5% a year later, the lowest since July 2021, down from 5.2% in November, the bank said.
“The NY Fed data should be supportive for oil prices as it suggests inflation has peaked,” said Phil Flynn, analyst at Price Futures.
Reporting by Stephanie Kelly; Additional reporting by Alex Lawler, Noah Browning, Florence Tan and Jeslyn Lerh; Edited by David Goodman, David Evans, and Cynthia Osterman
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