Crude oil price edges higher with renewed hopes over Chinese demand

crude oil price

Crude oil price edged higher on Monday, reversing some of the losses from the previous week. As at the time of writing, Brent futures – the benchmark for global oil – was at $91.67; up by 0.07%. Tighter inventories and renewed hopes over Chinese demand have boosted the commodity at the start of the week.

crude oil price
crude oil price

Hopes over Chinese demand

China is the second largest consumer of crude oil and the leading importer of the commodity worldwide. As such, the level of demand in the country tends to be a major driver of global oil prices.

Notably, COVID-19 lockdowns have been one of the commodity’s bearish drivers in recent months. However, the new week began with renewed hopes over the demand of crude oil in the nation; an aspect that explains the recorded gains.

In an effort to support the pandemic-hit economy, the Chinese central bank rolled over the maturing medium-term policy loans. These liquidity measure, coupled with its decision to keep interest rates low for the second month in a row, is an indication that the bank may remain dovish much longer. In the ensuing sessions, the nation’s GDP data will avail further cues on the status of the economy.

Support for OPEC+ supply cut

Crude oil price has also been boosted by support from various OPEC+ members regarding the recently approved output cut of over 2 million barrels per day (bpd). The cut is the largest since 2020 as is set to commence in November. The move, which was announced in early October, is aimed at supporting crude oil prices amid the potential decline in demand.

On the one hand, the US has condemned the move; citing the ongoing global economic turmoil and soaring energy prices. In fact, President Biden blamed Saudi Arabia and the other members of OPEC+ for siding with Russia.

Besides, the US released 7.7 million barrels from its strategic petroleum reserve (SPR) in the past week. In response to Washington’s assertions, Kuwait, Iraq, UAE, and Saudi Arabia have expressed support for the supply cut; an aspect that has boosted crude oil price at the start of the week.   

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