China’s Covid Concerns Continue To Weigh On Oil Prices

Hamilton Nwosa
Writer

Ad

Why Wike Should Resign or Be Sacked: A Call to Organized Civil Society in Nigeria to Uphold Anti-corruption Standards with Consistency, By Frank Tietie

By Frank Tietie The revelations by Nigerian social crusader, investigative journalist, and activist Omoyele Sowore regarding the current Minister of the Federal Capital Territory, Nyiesome Wike, are serious and warrant the attention of all Nigerians who care about the integrity of the country. Sowore has alleged that Wike laundered funds and concealed the purchase of…

Dangote Refinery Slams PENGASSAN, Describes Order as ‘Economic Sabotage’

By Abiola Olawale In an escalating labor showdown, the Dangote Petroleum Refinery has fired back at the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), criticising the latter’s order on Saturday. This is as the refinery owned by Africa’s richest person, Alhaji Aliko Dangote described PENGASSAN's order to cut crude oil and gas…

Intimate Affairs: ‘I don’t want a mother-in-law,’ By Funke Egbemode

By Funke Egbemode Tola doesn’t wish anybody dead. She just doesn’t want to go through what her mother went through in the hands of her grandmother. She had been told that she might just be lucky and end up with a husband with a kind mother. But she’s scared, I believe, irredeemably, by the trauma…

Ad

  • Oil prices initially extended their gains early on Monday morning on renewed hopes that economic activity in China would recover.
  • That movement higher was only brief, however, as a strong U.S. dollar and reports of record-high Covid cases in major Chinese cities sent prices falling.
  • While the lifting of restrictions in China will certainly limit downside fears, Covid will continue to cause problems in China over winter.

Crude oil began trade today with a gain on the resurgence of hopes that Chinese demand is about to enter recovery mode.

The hopes followed announcements from China that some pandemic restrictions will be relaxed.

The gains, albeit modest, reflect a reversal in market sentiment, which just last week led to a second consecutive weekly oil price decline on expectations that pandemic restrictions in China will continue to affect economic activity and with it oil demand for longer, as infections continued multiplying.

The situation remains uncertain because Covid cases are on the rise in the world’s top oil importer.

“The market was too optimistic. The virus will spread faster in winter and the rapid growth of cases makes it impossible for the Chinese government to adjust the zero-COVID policy,” Reuters quoted a CMC Markets analyst as saying.

“This policy pivot will help limit downside fears of a protracted restrictive approach to on-onshore activity, but it doesn’t eliminate the immediate demand hit from current lockdowns,” said SPI Asset Management’s head of trading and market strategy Stephen Innes in a note cited by Reuters.

Dutch ING noted in another note that the relaxation of certain restrictions was “a step in the right direction” but added that the market would take time to be convinced that this step is enough to sustain optimism about prices.

Meanwhile, U.S. Treasury Secretary Janet Yellen signaled that the U.S. would not penalize India for buying Russian crude outside the price cap devised by the G7, as long as Indian buyers refrain from using Western insurance, financing, and shipping services, which are all covered by the cap scheme.

Yellen also suggested that China would benefit from the price cap despite repeated signals from Beijing that it was not interested in taking part in the mechanism.

“We see the price cap is something that benefits China benefits India, and benefits all purchasers of Russian oil,” Yellen said. NB: Irina Slav wrote this article for Oilprice.com

 

Ad

Unlocking Opportunities in the Gulf of Guinea during UNGA80
X whatsapp