Oil prices rose by 2% in Monday’s trading session, recovering from some of the sharp losses it saw last week, as global stock prices stabilized after hitting a one-week low in two years.
Brent crude rose by 95 cents or 2% at $63.74 a barrel, while US WTI rose by $1.03, or 1.8%, to trade at $60.23 a barrel. The dollar’s decline helped support oil, making crude priced in the US currency less expensive than other currencies.
Oil consumption is still strong, despite the fact that US crude output has fallen at prices above the peak of $70 a barrel in early 2018. This threatens the Organization of the Petroleum Exporting Countries’ efforts to raise prices by reducing supply. Analysts currently see demand growth as very strong, fueling the current situation along with declines in places such as Venezuela. If demand remains strong, OPEC will remain in control until 2019. If global growth slows and demand for oil slows, however, production growth in the United States will become a problem, as OPEC’s efforts would begin to shrink.
On a separate note, China plans to launch crude oil futures on March 26, a move likely to trigger a shake-up in pricing in the world’s largest commodity market. Sources said that the Shanghai International Energy Exchange would manage the contracts in a long-awaited move, and would compete heavily with the dollar-denominated crude.
The final preparations are now underway to launch crude oil futures in Chinese currency on the Shanghai International Energy Exchange. China is now calling on oil producers and consumers around the world to participate in the new market, both from the international oil companies or other major companies within the country, and the Chinese government aimed at the internationalization of the yuan and the completion of trade operations through the local currency.
China’s oil imports reached a record level last month, signaling that he world’s second-largest energy consumer continues to grow. Government data showed that the country’s oil imports rose 20% year-on-year to 40.6 million tons last month, at 9.57 million bpd.