Brent futures gain on China’s demand recovery optimism

Front-month ICE Brent has climbed upwards by $1.96/bbl on the day from Friday, to $80.69/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Oil market sentiment is being lifted by expectations of a surge in Chinese oil demand during the Lunar New Year holiday travel season.

Hedge funds increased their net long positions last week, data from the Commitment of Traders (COT) shows. This indicates that hedge fund managers are bullish on Brent, despite fears about an economic slowdown.

Oil prices declined in the second half of last year as a result of a surge in supply, according to hedge fund trader Pierre Andurand. He predicts higher prices this year since “most of the supply surge is behind us, and demand surge is ahead of us.”

Downward pressure:

“Market sentiment has remained negative as China's battle with Covid-19 worsens. Despite removing most virus-related restrictions, a surge in cases across the country could stifle economic activity,” writes ANZ commodity strategist Daniel Hynes.

The World Bank will likely warn of a global recession in its bi-annual economic outlook tomorrow, Bloomberg reports. The news agency has cited the World Bank saying that “further adverse shocks could push the global economy into recession in 2023.”

By Konica Bhatt

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