Oil rally in China paused

The rally in oil, which was driven by China’s reopening, was paused on the first trading day of the new week. Oil showed its first negative performance in seven trading days as China’s reopening posed a mixed picture for global demand. After rallying more than 8% last week, U.S. crude tested below $80 on the first trading day of the new week. Brent crude also hit below $85. China lifted COVID-19 restrictions in late 2022 after years of strict restrictions. Analysts predict that oil demand in the largest crude importer is likely to break records. In addition to China’s rapid return, support for crude prices in recent sessions has come from rising expectations that the Fed’s aggressive rate hikes are nearing an end and a weaker dollar. Investors are also watching the impact of sanctions on Russian oil and product flows. “While China was the main driver of commodities last week, investor sentiment also rose on expectations that the Fed would slow its rate hikes,” said James Whistler, managing director at Vanir Global Markets. This week, investors will also be looking closely at valuations from the Organization of the Petroleum Exporting Countries as well as the International Energy Agency, which could highlight risks to consumption from slowing growth in the U.S. and Europe.