Oil falls in price at the beginning of week, traders assess prospects of China

After two weeks of growth, the cost of WTI oil fell to $81 per barrel. As a result, the prices came close to the highest level since mid-November. 

The abandonment of the zero-COVID policy in China strengthened the expectations concerning growth of oil consumption in the country. After the removal of restrictions, more people could travel back to their hometowns to celebrate the Lunar New Year. Industrial activity is expected to increase after the holiday week. 

Oil overcame the weak beginning of the year because the outlook of the Chinese economy had improved. The weakening of the dollar became additional support for oil amid expectations that the Fed will soon complete the rate hike cycle.

Also, traders assess how the restrictions will influence Russian supplies. The International Energy Agency states that Russia will reduce oil production by nearly 1.6 million bpd by the end of this quarter compared to the beginning of last year.

US Treasury Secretary Janet Yellen expressed confidence that restrictions can also be applied to Russian petrochemicals, although it will be difficult. Restrictions will enter into force on February 5.