Oil prices increased in early trade on Monday after dropping over 8% last week to more than three-week lows. As worries about major economies prevailed, signs of an increase in demand in China emerged.
At 00:22 GMT, Brent crude futures barely increased by 16 cents (0.2%) to $80.10 per barrel, while US West Texas Intermediate (WTI) crude futures increased by 15 cents (0.2%) to $73.54 per barrel.
Last Friday, WTI and Brent fell by 3 percent as a result of concerns that the Federal Reserve will keep hiking interest rates due to positive US jobs data, which in turn helped the currency.
On Sunday, International Energy Agency (IEA) Executive Director Fatih Birol emphasized that China’s recovery is still a major factor in oil prices, despite the market’s past week-long focus on recession fears.
As reported by Birol, China will account for half of the increase in global oil demand this year.
The Organisation of Petroleum Exporting Countries (Opec) and its partners, collectively known as Opec+, may have to reevaluate their plan to cut output by two million barrels per day until 2023 depending on how robust that recovery is.
“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Birol told Reuters on the sidelines of a conference in India.
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The Group of Seven (G7), the European Union, and Australia agreed on price caps of $100 per barrel for diesel and other goods that trade at a premium to crude and $45 per barrel for those that trade at a discount, such as fuel oil, which went into force on Sunday.
