WTI jumps firmly above $81.50 amid US Dollar’s weakness and easing China’s Covid curbs
|- WTI has accelerated to near $81.60 as the Chinese economy is easing Covid-lockdown measures.
- A significant decline in the US Dollar has also strengthened oil prices.
- OPEC+ has not announced fresh supply cuts, continuing current cuts till November 2023.
West Texas Intermediate (WTI), futures on NYMEX, has displayed a stellar rebound to near $81.63 in the Tokyo session as easing lockdown restrictions in China has infused an adrenaline rush into the oil bulls. The oil price has recovered dramatically after correcting to near the round-level support of $80.00.
The responsive buying action in oil prices is backed by easing Covid-19 curbs in China after their severe protest for reopening the economy. This has reaffirmed higher oil demand projections as the reopening of the Chinese economy indicates no restrictions on the movement of men, materials, and machines. Economic activities in the Chinese economy will start gearing up and will cement oil demand in the largest oil-purchasing country.
Also, weakness in the US Dollar Index (DXY) is strengthening the oil prices. The USD Index has refreshed its five-month low below 104.20 as the risk appetite theme has been strengthened by the market participants amid rising expectations for deceleration of the interest rate hike pace by the Federal Reserve (Fed). Apart from that, a solid United States labor market indicates robust oil demand.
On the supply front, OPEC+ didn’t announce further production cuts in its meeting on December 4, apart from the extension of the prior promise of cutting two million barrels of oil production per day till November 2023. This resulted in a corrective move in the oil prices, but a firmer recovery backed by easing zero-Covid policy in China has resumed oil’s upside journey.
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