Tuesday, February 27, 2024

Oil prices rise on demand for holiday travel to China

Oil prices rose on Monday after reversing early morning losses as investors became more optimistic.

Brent crude finished up $1.07, or 1.3%, at $82.73 a barrel, while US West Texas Intermediate crude was up 89 cents, or 1.1%, at $78.76.

Both contracts fell more than 5% last week, posting the first weekly declines in five years, as implied US gasoline demand fell from a year earlier.

China’s difficult economic recovery after the Covid-19 pandemic has clouded the outlook for oil demand, although the country’s customs data released on Friday showed record import volumes in March.

China bookings for overseas travel for the upcoming May Day holiday point to a resurgence in travel to Asian countries, but numbers are still far from pre-Covid-19 levels, with long-haul airfares rising and not enough flights available.

“There’s a lot of optimism around the Chinese holiday when it comes to jet fuel demand, following early real numbers on Chinese demand growth,” said Bob Yawger, head of energy futures at Mizuho.

A supply adjustment due to further production cuts announced by the OPEC+ bloc starting in May could also lift prices.

“The production cuts planned by the OPEC+ alliance and a strong demand prospect from China could boost prices in the coming days,” said independent analyst Sugandha Sachdeva.

Oil exports from northern Iraq also showed little concrete sign of recovery after a month of stagnation as aspects of a deal between Baghdad and the Kurdistan Regional Government (KRG) have yet to be finalized, according to four sources.

World Nation News Desk
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