After a notable growth of more than 8% last week, a decline in WTI oil to the level of $79 was registered on Monday. At the same time, the lifting of COVID-related restrictions in China is likely to cause a rise in economic activity and mobility of the country’s population. This fact, in its turn, might increase oil demand in China to record levels, according to analysts’ forecasts.
As it was stated by James Whistler, managing director of brokerage Vanir Global Markets Pte, China was the major driver of commodity prices last week, though not the only one. He noted that traders’ sentiment was also supported by expectations of slowing down the pace of the Fed’s rate hiking. Whistler said that he and other experts of the company see some growth prospects, although he recommended remaining cautious on the eve of the Lunar New Year and the nationwide holidays in China next week.
Meanwhile, this week, the attention of investors will be drawn to new forecasts from OPEC and the International Energy Agency. Analyzing these data might aid in determining risks for oil consumption because of the slowing GDP in the U.S. and European countries. OPEC’s analysis is scheduled to be released on Tuesday, and the IEA will release its forecast the following day. The World Economic Forum in Davos might also provide market participants with some significant information.