After falling by over $2 per barrel the previous session, oil rose Monday as optimism about the Chinese economy overtook concern about a global recession.
China is the largest crude oil importer in the world. China has seen its first wave of COVID-19 cases since Beijing lifted mobility restrictions, but it plans to increase support for the economy by 2023.
Analyst at Avatrade, Naem Aslam said that “there is no doubt” that the demand has been adversely affected.
However, it is not all bad. China has pledged to combat pessimism regarding its economy and will make every effort to increase economic growth.
Brent crude oil gained 0.5% to $79.41 per barrel at 1100 GMT, while U.S. West Texas Intermediate crude crude increased 30 cents to $74.59.
After Russia’s invasion of Ukraine, oil prices reached a record $147 per barrel. Since then, most of the gains from this year have been lost as supply worries and recession fears continue to be a major drag on oil prices.
Last week, the U.S. Federal Reserve raised interest rates and offered more. At its Monday and Tuesday meetings, the Bank of Japan could change its ultra-dovish position.
Stephen Brennock, an oil broker PVM stated that the prospect of higher rates will impact economic growth and reduce oil demand.
The U.S. Energy Department supported oil by announcing Friday that they will start repurchasing crude oil for Strategic Petroleum Reserve. This is the first purchase since the release of a record 180,000,000 barrels this year.
