January 16, 2023 (MLN): Oil prices dipped on Monday, but optimism that China's reopening from COVID restrictions will lift fuel demand in the world's top crude importer kept prices near 2023 highs, reached after a surge in prices last week, as per Reuters reported.
To note, Brent crude down by 64 cents (0.8%) to $84.64 a barrel, while US West Texas Intermediate crude was at $79.30 a barrel, down 56 cents (0.7%), owing to thin trade during a US public holiday.
“Both contracts rose more than 8% last week, the biggest weekly gains since October and that may have spurred some short-term selling to lock in the profits from the move higher”, Reuters added.
It further stated "After the scale of the move last week, we could be seeing some profit taking," said Warren Patterson, ING's Head of Commodities Strategy, adding that thinner trading volumes would make any selling appear to be more pronounced.
Prices continued to hover near 2023 highs on Monday. China's crude importers rose 4%YoY in December, while an expected resurgence in travel for the Lunar New Year holiday at the end of the week is brightening the outlook for transportation fuels, Reuters noted.
Traffic levels in China are continuing to rebound from record lows following the easing of COVID-19 restrictions, resulting in stronger demand for crude and oil products, ANZ analysts said in a note.
