Optimism about a recovery in demand in China has been replaced by Fed concerns. A number of Fed officials have issued statements that the US Federal Reserve should raise interest rates above 5 percent to deal with inflation. These comments triggered the decline in Asian stock markets and many commodities.
Oil rallied yesterday as the Beijing government eased the stringent virus restrictions imposed last year. Today, the barrel price of West Texas-type crude oil for February delivery decreased by 0.4 percent to $74.36, while a barrel of Brent oil for March delivery fell by 0.2 percent to 79.35.
Crude oil made a weak start to the year. The slight increase in Russia’s oil exports last week also did not change the downward trend in oil.
Warren Patterson, Commodity Strategist at Singapore-based ING Groep, said that the weakness in the dollar and increasing optimism about Chinese demand support prices, but supply appears to be sufficient in the markets in the short term.