Oil closes near highs for the year due to expectations about Chinese demand

Los oil prices They fell on Monday but remained close to this year’s highs, as the relaxation of Covid-19 restrictions in China raised expectations of a recovery in demand in the world’s leading importer of crude oil.

The crude Brent fell 82 cents, or 0.96%, to $84.46 a barrel, while US crude West Texas Intermediate It was down $1.01, or 1.2%, at $84.24-79.60 a barrel, in thin trading for a US holiday.

Both contracts rose more than 8% last week, the biggest weekly gains since October, after China abandoned what was left of its zero Covid-19 policy by reopening its borders on January 8.

Chinese crude oil imports rose 4% year-on-year in December, while an expected resurgence in travel for the Lunar New Year holiday at the end of the week raised the outlook for demand for transport fuels.

Traffic levels in China are picking up from record lows after the easing of Covid-19 restrictions, translating into higher demand for crude oil and oil products, ANZ analysts said in a note.

However, new reports that emerged over the weekend, highlighting an increase in deaths caused by Covid-19, weighed on analysts’ spirits.

“Although China’s prospects have turned around, it must be borne in mind that the normalization of its oil demand will be gradual (…) As things stand, China’s oil recovery continues to be more predicted than real” said Stephen Brennock, an analyst at PVM.

Meanwhile, the Organization of Petroleum Exporting Countries and the International Energy Agency will release their monthly reports this week, which are closely watched by investors for global supply and demand prospects.

Investors will also look to the World Economic Forum (WEF) for clues about the outlook for Davoswhich was inaugurated on Monday, and will be attentive to the meeting of the bank of japan (BOJ) this week to determine whether it will defend its massive stimulus policy.