Jan 31, 2023
Oil rises in bid to turn corner after moving sideways for months
The valuations in natural resources are unbelievable: David Taylor
Oil rose and showed signs of shedding its monthslong malaise as factors ranging from the end of the Federal Reserve’s rate increases to swelling demand in China give bulls more ammunition.
An OPEC+ advisory committee that meets on Wednesday isn’t expected to change its production outlook, putting upward pressure on prices as China’s lifting of Covid-19 restrictions increases global demand. Crude also is taking a cue from equity markets, which rallied on Tuesday as economic data pointed to cooling inflation that may give the Federal Reserve room to pause rate hikes.
Still, the bears’ dominance won’t be easy to break. With January’s decline now set, oil has fallen in seven of the past eight months. The commodity has also been stonewalled by its 100-day moving average, and economists are forecasting a 65 per cent probability of a US recession — a scenario that would weigh on demand.
The bull and bear camps have fought largely to a standstill the past two months, and for the last couple of weeks, crude has been stuck in a narrow channel between its 50-day and 100-day moving averages.
- WTI for March contract rose 97 cents to settle at US$78.87 a barrel in New York.
- Brent for April contract rose 96 cents to US$85.46 a barrel.
- Brent’s March contract expires on Tuesday.