Oil presented a flat outlook on the first trading day of the new week as investors evaluated the demand outlook after the reopening of China and the risks to Russian production in 2023.
U.S. crude oil eased in real to $81 a barrel after the two-week gain in the U.S. benchmark index closed at the highest level since mid-November. Brent oil is also at $87.
The fact that China left behind the tight Kovid policy strengthened the expectations that the consumption of the country, which is the world’s largest importer, will increase. Industrial activities are expected to increase after the middle of the holiday in China.
Oil had a weak start to the new year. The additional boost to crude came from expectations that the Fed is close to ending a streak of sharp rate hikes that have weakened the dollar. Investors also appreciate the impact of additional restrictions on Russia’s power flows as the war in Ukraine continues.
SLB, the last of the largest oilfield service providers to do business in Russia, warned last week that drilling and related business in the country will decline this year as international isolation in the country deepens.
The International Power Agency said in its latest report that Russia will shut down production of about 1.6 million barrels per day by the end of this quarter, compared to pre-invasion levels.