Oil edges higher as global recession fears drag down hopes for China’s economy

  • traders process the reopening of the Chinese economy
  • EU countries agree to gas price cap, Czech Republic says
  • Rising interest rates and recession fears weigh heavily
  • America will start buying for strategic stockpile

NEW YORK, Dec 19 (Reuters) – Oil prices edged higher on Monday as fears of a global recession limited gains on optimism that China is easing its COVID-19 restrictions.

China, the world’s top crude importer, is experiencing its first of three expected waves of COVID-19 cases after Beijing eased mobility restrictions but said it plans to extend support for the economy into 2023 .

“There is no doubt that demand is being adversely affected,” said Naeem Aslam, analyst at brokerage Avatrade.

“However, not everything is so negative as China has vowed to fight all pessimism about its economy, and will do whatever it takes to boost economic growth.”

Also Read :  Five IRS employees stole COVID relief funds to buy Gucci, trips to Las Vegas, Justice Department says

Brent crude was up 23 cents at $79.27 a barrel by 11:13 a.m. EST (1613 GMT), while US West Texas Intermediate crude was up 23 cents at $74.52.

Prices pared gains after earlier rising more than $1 a barrel.

“The reality here is that we still fear a major recession on the horizon that hasn’t gone away,” said Bob Yoger, director of energy futures at Mizuho. “It’s going to be difficult to make a big profit here.”

Oil soared to its record high of $147 a barrel a year ago after Russia invaded Ukraine in February. It has since given up most of this year’s gains as recession fears outweighed supply concerns.

Also Read :  Walmart's Black Friday Deals Are Still Going Strong

A spokesman for the Czech Republic said on Twitter on Monday that energy ministers from EU countries had agreed to set a gas price cap. The deal comes after weeks of talks over the emergency measure, which has divided opinion across the bloc as it seeks to address the energy crisis. read more

The US Federal Reserve and the European Central Bank raised interest rates last week and promised more. The Bank of Japan, meanwhile, is likely to reverse its overtly dowish stance when it meets on Monday and Tuesday.

“The prospect of further rate hikes will weigh on economic growth in the new year and in doing so will curb oil demand,” said Stephen Brennock at oil broker PVM.

Also Read :  Wall Street futures resume fall as economic worries weigh

Oil was supported on Friday by the US Energy Department saying it would begin repurchasing crude for the Strategic Petroleum Reserve – the first purchase since releasing a record 180 million barrels from the reserve this year.

Reporting by Stephanie Kelly; Additional reporting by Alex Lawler; Editing by David Goodman, Barbara Lewis, Andrea Ricci and Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

Stephanie Kelly

Thomson Reuters

A New York-based reporter covering the US crude markets since 2018 and member of the energy team covering oil and fuel markets as well as federal policy around renewable fuels.

Source

Leave a Reply

Your email address will not be published.