On Monday, oil prices increased by more than 3% as China’s decision to reopen its borders improved the outlook for demand and overshadowed worries about a global recession.
The recovery in risk sentiment was supported by the reopening of the world’s largest crude importer and expectations for less-draconian increases in interest rates in the United States based on recent U.S. data, with Asian equities, rising and the dollar weakening.
U.S. WTI crude increased $2.55, or 3.5%, to $76.32. Meanwhile, Brent crude increased by $2.51, or 3.2%, to $81.01 per barrel.
The rally in oil prices came after both benchmarks lost more than 8% last week. This was the biggest weekly drop at the start of a year since 2016.
China, over the weekend, reopened its borders to foreign travelers as part of a new phase in the fight against COVID-19. According to Beijing, it will have approximately 2B domestic trips during the Lunar New Year period, almost twice as many as in 2018 and 70% more than in 2019.
The massive influx of Chinese tourists could lead to a new spike in Covid infections, despite Monday’s oil price recovery, and broader economic worries continue to exist.
Rosneft Wants to Supply Gas
According to the daily Kommersant, Russian oil giant Rosneft (ROSN.MM) wants to supply natural gas from its fields in the Krasnoyarsk and Irkutsk regions to the Power-of-Siberia 2 pipeline that will supply China via Mongolia.
Gazprom (GAZP.MM), Russia’s largest natural gas producer, hopes to supply gas through its 2,600-km Power-of-Siberia 2 pipeline by 2030. The pipeline can transport 50 bcm annually.
According to the Norwegian Petroleum Directorate (NPD), Norway’s oil production should increase by 6.9% this year as the enormous Johan Sverdrup field ramps production. Gas volumes should remain stable near record highs.
According to NPD’s predictions, crude oil and other petroleum liquid production will likely rise to 2.02M barrels per day (BPD) in 2023 from 1.89M last year.
According to the NPD’s projections, the total amount of oil and gas will increase to 4.12M barrels of oil equivalent per day in 2023 from a preliminary 3.99M. Total Norwegian output in 2025 should be a two-decade high of 4.3M, falling just short of the record 4.54M barrels produced in 2004.