Oil rallies as markets expect demand to recover in 2023

Oil prices keep rising on Tuesday, with markets hoping demand for black gold will recover in 2023. This is due to China’s reopening and a colder-than-expected snap coming in the short term. This scenario could take place despite mounting fears of a global recession.

Optimistic outlooks on Chinese enterprises to resume operations served as a major driver of the recent rally in the crude oil market. Prior to that, Beijing initiated a phased lifting of restrictions related to the COVID-19 pandemic. 

President Joe Biden's statement regarding the country's commitment to replenish the strategic oil reserve next year has also spurred demand in the markets. 

Moreover, signs of a colder-than-expected winter reinforced the outlook that demand for crude oil, particularly for heating purposes, is likely to keep rising. The International Energy Agency (IEA) projected that demand for black gold will be strong in 2023. 

Higher interest rates and soaring inflation could crimp economic activity in the short term, affecting oil demand. 

A stronger dollar also moderated the growth of black gold, as appreciation of the U.S. currency facilitates higher commodities priced in the greenback.