Oil Seems Trapped Between U.S Economic Data And China’s Industrial OutlookFebruary 23, 2023
This week, the US data is expected to indicate a further increase in inflation, which will require the Fed to remain vigilant.
Like all other commodities Oil is also trapped in between all these news. But most significantly the inflation talks and China’s industrial outlook are keeping oil prices off the hook.
Feds’ action, most probably the increase in interest rates is another major factor that is keeping oil pressure.
In case if Feds decided to increase the interest rate to fight inflation, this would give U.S. Dollar further strength.
The strong U.S. Dollar that is already tormenting commodities will put more pressure on the prices of commodities, especially oil prices.
But That’s Where China’s Role Becomes Important
Although U.S. economic data has no good news for crude oil. But the recent reopening of China’s industrial activities is a positive sign for oil.
As the things stand crude oil prices are moving sideways. Experts have already said that oil will be the biggest victor of the commodity market in the long run.
If China’s industry kept operating at its fullest potential, then soon the current supply of crude oil will not be enough to fulfill the current demand.
That’s where the crude oil prices will begin to rise.
But it will be difficult for those who are investing in a market to break out due to China’s exponential buying of crude oil.
It seems that they have to wait for a bit longer s China will not be able to purchase crude oil for another couple of weeks.
This means as of now investing in oil is a very risky trade and not recommended by any means.
Markets experts already are concerned over the recent trap of crude oil between the U.S. economic outcomes and China’s industrial revival.
What’s next for Crude Oil Then?
Before talking about future prices, it is important that you should understand that crude oil price at the start of this week has recovered a bit.
The price of crude oil which was down by 4% by the end of the last week, rebounded despite the fact that the oil trade was very fishy on Monday.
Most prominently WTI crude oil seems to be high by 31 cents for the month of March. In other words, its March price is high than 0.4% and estimated at around $76.86 per barrel.
This price can go further up depending on the situation. This likely increase for March 2023 is much cherished by the market.
The benchmark for US crude plummeted by almost 7% for three consecutive weeks in the month of Feb.
Ensuring that gold losses all its momentum that it had carried forward in Feb 2023.
Experts are hopeful that in March 2023, the oil will pick its momentum for the position where it all went wrong.
Conversely, the price of Brent crude oil for March is expected to be down by 62 cents or low by 0.7%. The BRENT crude oil will be available at $83.45 per barrel.
Ever since Beijing announced at the beginning of the year that it was abolishing all COVID controls, this would set the demand for crude oil on the fire.
According to IEA, this year’s oil market has the potential to be dramatically transformed by Chinese oil imports.
It has also been predicted that Chin will consume an additional 500,000 barrels per day for its industry to operate at its peak efficiency. That much of daily consumption will take global oil consumption to a whole new level.
According to the forecast, “global oil demand will reach a record 101.7 million bpd in 2023, with an increase of 1.9 million bpd.
Half of the global consumption will be contributed by China after the country has decided to open its industry once more. Previously, China’s oil consumption was at its lowest due to Covid-19 sanctions.