- Oil heads for a weekly loss as demand concerns persist
- Feb ’23 WTI lost nearly $6.50 this week to trade around $74/Bbl
- A relatively stronger U.S. Dollar and weaker economic outlook continue to weigh on crude prices
- A stronger dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- Furthermore, James Bullard, president of the St Louis Fed, said on Thursday that the central bank's policy rate is not yet restrictive, indicating that he sees rate hikes get closer to a high enough level to bring down inflation in '23
- Ongoing concerns about how smoothly China will reopen and whether the country can sustain the eased restrictions persist
- Covid spike in China, the largest importer of crude, dampens near-term oil demand, but AEGIS notes that demand would see an uptick after the initial Covid waves
- Additionally, Saudi Arabia reduced the price of crude sold to Asia and Europe in February, indicating concerns about the near-term outlook
- China expects a significant uptick in travel over the Lunar New Year, which takes place from January 21 to 27, as the country abandons COVID-19 regulations (Reuters)
- During the holiday, authorities estimate 2.1 billion passenger trips by air, boat, and land, more than double the 1.05 billion trips made in the previous year
- The Civil Aviation Administration of China anticipates an average of 11,000 flights each day which is around 75% of the pre-COVID-19 level in 2019
- However, a Covid surge continues to threaten the nation, and how China responds to the probable rise in virus cases that will accompany the reopening will be key