Oil prices recovered from last week’s 8.2% drop on supply concerns, but were still trading near a three-week low on concerns that slowing growth in major economies could limit fuel consumption.
Brent crude futures were up 86 cents, or 1.09%, at $80.82 a barrel. US WTI crude futures were down 54 cents, or 0.75%, at $73.95.
Recession fears dominated the market last week. However, ther were prospects for China’s recovery after the easing of COVID-19 restrictions remain buoyant, with oil prices strengthening.
The International Energy Agency expects half of the growth in global oil demand this year to come from China, its chief said on Sunday, adding that demand for jet fuel has grown massively.
Last Friday, WTI and Brent fell 3.2% after strong US jobs data fueled tensions that the Federal Reserve will continue to increase interest rates and strengthen the dollar.
A strong dollar usually reduces demand for oil that can only be bought with dollars. According to researchers, higher interest rates are a check on price increases as they are likely to dampen economic growth and boost fuel demand.
A resilient labor market could strengthen households’ willingness and ability to continue to consume and thus support corporate earnings and stocks in the near term.
Supply concerns continued to weigh on markets as operations at Turkey’s oil terminal in Ceyhan were halted after an earthquake struck.
Price caps on Russian products were lifted on Sunday when the Group of Seven, the European Union and Australia agreed to $100 per barrel price caps on diesel and other products that trade at a premium to crude, and $6 per barrel on products.
Norway’s Sverdrup oil
Equinor said it had halted oil production at Johan Sverdrup Phase 1, the largest field in the North Sea, due to a technical fault in the cooling system.
Sverdrup 1 has a capacity of about 535,001 barrels of oil per day, while Sverdrup 2 can 185,001 barrels per day.
The Johan Sverdrup field didn’t have a power supply on Monday due to a technical fault, the Scandinavian power company Nordpool said.
The outage should last 2-3 days, with a preliminary reset set for the afternoon of February 8.
The cut in gas prices may continue to affect more businesses, Poland’s prime minister said on Monday.
Mateusz Morawiecki said that from April until the end of 2023, bakeries will pay a reduced rate of $45.66 per megawatt hour (MWh), the same as the rate for households.
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