By Yasin Ebrahim
Investing.com — U.S. crude oil prices cut losses to settle higher Monday as investors weighed up the demand outlook amid easing Covid lockdown measures in China and the impact of slowing global growth.
On the New York Mercantile Exchange climbed 62 cents to settle at $85.73 a barrel, while on London’s Intercontinental Exchange, gained 65 cents to settle at $92.00 a barrel.
Oil prices had started the session on the back foot, down more than 3% as investors worried that further Federal Reserve tightening expected later this week will slow global growth further and pose an even bigger threat to oil demand.
The Fed is
to raise its benchmark rate by 0.75% and release fresh projections on inflation and economic growth as well as updated forecasts on future rate hikes that will likely show higher for longer rates and slowdown in growth.
Sentiment on oil prices was boosted by easing COVID restrictions in major cities in China, the largest importer of oil. Chengdu, a major Chinese city with about 21 million inhabitants, reopened after a two-week lockdown.
The positive start to the week for oil prices followed a more than 2% decline last week after the International Energy Agency cut its forecast on oil demand and anticipated growth to stop in the fourth quarter.
The IEA cut its forecast for demand growth this year by 110,000 barrels per day (bpd) to 2 million bpd.
The pressure on oil prices from weaker demand and higher supply isn’t likely to continue for the long term as major oil producers and ongoing geopolitical tensions could provide some respite.
“Weakening economic activity and forecasts is likely to stall the post COVID recovery in oil demand but prices could see upward support from OPEC+ market management, post COVID demand recovery, unplanned outages in oil and power generation and more geopolitical tension,” Credit Suisse said in a recent note as it maintained its near-term WTI forecasts for the fourth quarter of $87 per barrel.