Crude Oil Rises as Optimism Outweighs…

On Monday, the crude oil market gained as excitement about China loosening its COVID-19 limitations outweighed concerns about a global recession weighing on energy consumption.

Brent crude gained 76 cents to settle at $79.80 a barrel, while the United States West Texas Intermediate (WTI) crude rose by 90 cents to $75.19 per barrel.

China, the world’s top crude oil importer, is experiencing its first of three expected waves of COVID-19 cases after it relaxed mobility restrictions but said it plans to step up support for the economy in 2023.

The country is in the first of an expected three waves of COVID cases this winter. Further waves are expected to come as people follow the tradition of returning en masse to their home areas for the Lunar New Year holiday next month.

China had not reported any COVID deaths since December 7, when it abruptly ended most restrictions key to a zero-COVID tolerance policy following unprecedented public protests.

As part of the relaxation of the zero-COVID restrictions, mass testing for the virus has ceased, raising questions about whether official case numbers can accurately reflect the scope of the outbreak.

As COVID infections in the world’s second-largest economy grow as a result of the rapid easing of tough regulations, this will harm businesses and consumers, while a faltering global economy damages Chinese exports.

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Also, European Union (EU) energy ministers on Monday agreed to a gas price cap after weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis.

The deal follows weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis.

The energy ministers agreed that the cap on gas prices would be triggered when benchmark gas prices spike to €180 per megawatt hour.

The US Federal Reserve and European Central Bank raised interest rates last week and promised more. The Bank of Japan, meanwhile, modified its yield curve control tolerance range while holding its ultra-low benchmark interest rates steady.