Oil performed negatively for the first time after 7 trading days as China reopened, revealing a complex outlook for worldwide demand.
After rallying more than 8 percent last week, US crude oil tested below $80 on the first trading day of the new week. Brent oil also saw below $85.
China lifted its Covid-19 restrictions in late 2022, after years of strict restrictions.
Analysts hypothesize that oil demand from the largest importer of crude oil will likely break records.
Adding to China’s rapid turnaround, crude oil prices in recent sessions have been driven by rising expectations that the Fed’s aggressive rate hikes are now coming to an end and a weakening dollar. Investors are also watching the impact of the sanctions on Russian oil and trace flows.
“While China was the main driver of commodities last week, investor sentiment has also increased with the expectation that the Fed will slow rate hikes,” said James Whistler, Managing Director of Vanir Global Markets.
This week, investors will take a closer look at valuations from the Organization of the Petroleum Exporting Countries, as well as the International Power Agency, which could draw attention to consumption risks from slowing growth in the US and Europe.