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Oil prices surges due to Chinese demand and weakening dollar

Future tight monetary policy by the Fed has been made worse by rising crude oil stockpiles in the US.

Beijing, 13 March 2023 (GNP): Oil prices increased slightly in late morning Asian trade on Monday, recovering from a poor start as a rebound in Chinese demand and a lower dollar supported a market unnerved by the possibility of future US interest rate increases.

Brent crude futures were up 19 cents, or 0.23 percent, to $82.97 a barrel by 0410 GMT after initially declining. The price of West Texas Intermediate crude (WTI) rose 20 cents, or 0.26 percent, to $76.88 a barrel.

According to ANZ Bank analysts in a note on Monday morning, market sentiment was shaky as concerns about future rising crude oil stockpiles have made tight monetary policy by the Fed worse in the US.

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In describing the conflicting emotion drivers in the crude market, Stephen Innes, managing partner of SPI Asset Management, compared it to the battle between economic malaise in the West and soaring activity figures in the East.

Innes continued, “From the standpoint of an oil trader, the US dollar should weaken as investors give it up on a re-acceleration of Fed rises; this clears a road for more solid Chinese fundamentals to rule commodity trading.

A weaker dollar supports oil prices because holders of foreign currencies can purchase oil at a lower price.


A weaker dollar supports oil prices because holders of foreign currencies can purchase oil at a lower price. 


A selloff in US assets at the end of last week caused by the failure of Silicon Valley Bank and New York-based Signature Bank and worries about probable contagion has also increased downward pressure.

Amin Nasser, the CEO of Saudi Aramco, made some supportive remarks regarding Chinese demand for crude oil on Sunday.

We are talking about two million barrels if you consider China opening up, an increase in jet fuel demand, and very little spare capacity, so we are cautiously hopeful in the near midterm and the market will remain tightly balanced.

Also Read: Pakistan to import oil from Russia

The remarks follow the disclosure that Riyadh and Tehran had agreed to normalize their diplomatic relations in a deal mediated by China, potentially opening the door to the restoration of a nuclear agreement that would permit the sale of Iranian crude that is presently prohibited.

After Friday’s upbeat trend, when US job figures surprised to the upside, oil has had an erratic start to the week. According to a Reuters survey, the nonfarm payrolls increased by 311,000 in February, exceeding estimates of 205,000 new positions.

For the first time since July 2020, US energy businesses this week decreased the number of oil and natural gas units operational for a fourth week in a row, according to energy services company Baker Hughes Co.