(MENAFN- AzerNews) Oil prices inched up on Monday after falling 8% last week to
more than three-week lows as concerns that slower growth in major
economies may limit fuel consumption outweighed signs of a demand
recovery in China, the world's top oil importer.
Brent crude futures rose 32 cents, or 0.4%, to $80.26 a barrel
at 0700 GMT, while U.S. West Texas Intermediate (WTI) crude futures
climbed 22 cents, or 0.3% higher, to $73.61.
Last Friday, WTI and Brent slid 3% after strong U.S. jobs data
raised concerns that the Federal Reserve would keep raising
interest rates, which in turn boosted the dollar. The stronger
greenback typically reduces demand for dollar-denominated oil from
buyers paying with other currencies.
While recession fears dominated the market last week, on Sunday
International Energy Agency (IEA) Executive Director Fatih Birol
highlighted that China's recovery remains a key driver for oil
prices.
The IEA expects half of global oil demand growth this year will
come from China, where Birol said jet fuel demand was surging.
He said depending on how strong that recovery is, the
Organization of Petroleum Exporting Countries (OPEC) and allies,
together called OPEC+, may have to reassess their decision to cut
output by 2 million barrels per day through 2023.
'If demand goes up very strongly, if the Chinese economy
rebounds, then there will be a need, in my view, for the OPEC+
countries to look at their (output) policies,' Birol told Reuters
on the sidelines of a conference in India.
Higher interest rates, however, are keeping a lid on further
price gains, as they are likely to curtail economic growth and
increases in fuel demand, say analysts.
'We are not seeing any big evidence of a China domestic demand
rebound yet, though mobility numbers are encouraging. Hence,
concerns about central banks' rate hike cycles and higher for
longer interest rates remains the key drag on oil prices after
falling more than 7% last week,' said Suvro Sakar, lead energy
analyst at DBS Bank.
'It's not immediately intuitive that good jobs data would cause
a crash in oil prices, but such are the vagaries of the market
currently.'
Price caps on Russian products also took effect on Sunday, with
the Group of Seven (G7), the European Union and Australia agreeing
on caps of $100 per barrel on diesel and other products that trade
at a premium to crude, and $45 per barrel for products that trade
at a discount, such as fuel oil.
'For the moment, the market expects non-EU countries will
increase imports of refined Russian crude, thus creating little
disruption to overall supplies,' ANZ analysts said in a client
note.
'Nevertheless, OPEC's continued constraint on supply should keep
the market tight,' they said.
Saudi Arabia's energy minister also warned over the weekend that
sanctions and underinvestment in the energy sector could result in
a shortage of energy supplies.
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