Oil prices continue to recover. WTI trades at the highest level since December 5, 2022 and closes in on $80 per barrel area, where 50-session moving average can be found. Weak USD could be the reason behind the latest rebound. Persisting USD weakness in 2023 could be an important support factor for commodities. Recessionary fears and lower economic activity have been a key brake on oil prices. However, this may be set to change now, given shift in Covid policy from Chinese authorites. Official reports show only a few thousand cases for December 20. However, unofficial reports say that as much as 37 million new Covid cases could have been detected that day in China! It is a huge number but given that most of cases are asymptomatic, we may never see a real picture in the data. Moreover, Chinese authorities note a high number of infections but are reluctant to reimpose restriction signalling that harsh measures may be a thing of the past.
It was expected that drop in economic activity would lead to a drop in Chinese oil imports. Meanwhile, data showed that imports continued to increase in late-summer and autumn.
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Chinese oil imports in October were the highest since May and higher than average for 2017-2021 period. Source: JODI
OIL.WTI continues to recover and a test of 50-session moving average cannot be ruled out next week. Source: xStation5
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