Oil prices bounce back after hopes of better fuel demand in China

Oil prices reportedly surged after China extended liquidity measures to aid its pandemic-ravaged economy, raising expectations for a stronger future for fuel demand from the largest crude importer in the world.

After falling 6.4% the previous week, Brent crude futures rose by 0.6%, or 53 cents, to $92.16 per barrel. After falling 7.6% last week, U.S. West Texas Intermediate crude jumped by 0.4%, or 34 cents, at $85.95 per barrel.

The world's largest crude importer, China, raised optimism for a brighter gasoline demand forecast after rolling over liquidity measures to support its pandemic-affected economy.

A senior National Energy Administration representative stated that the nation also pledged to significantly boost domestic energy supply capacity and take up risk controls in vital commodities such as coal, oil and gas, and power.

Another state official stated at a news briefing in Beijing that China would continue to enhance reserve capacities for important commodities.

CMC Markets analyst Tina Teng stated that oil gained support from a number of factors, notably Chinese President Xi Jinping's remarks at the recent Party Congress, which reaffirmed support for the economy and were seen as a positive indicator for the forecast for demand.

This week, trade and economic data from China are anticipated to be revealed.

President Xi's strict COVID-19 policy has the world's No. 2 economy suffering what will probably be its worst performance year in over 50 years, even though its third-quarter GDP growth may improve from the previous quarter.

It is projected that oil prices will Keep on fluctuating as OPEC+ production cutbacks compress supply prior to the EU's oil embargo and future U.S. Federal Reserve rate of interest increases cap price hikes.

The Organization of the Production Exporting Countries (OPEC) representatives and their supporters, including Russia, lined up on Sunday to encourage the drastic reduction in oil production, decided this month after the White House accused Saudi Arabia of pressuring other countries to back the initiative.

Source credit: https://www.reuters.com/business/energy/oil-bounces-higher-us-dollars-strength-eases-2022-10-17/