Oil Makes Gains Despite Bearish Traders Fretting Over Economic Headwinds

Meanwhile, bullish Saudi Arabia raises oil prices in anticipation of China boom: File Image/Pixabay

Oil trading resulted in gains on Monday, but bearish sentiment continued to govern sentiment while the analytical community worried that global growth could go south just as easily as it could flourish in 2023.

Typical was remarks made by BCA Research, which stated in a note, "A resilient labour market could buttress households' willingness and ability to continue consuming and therefore support corporate earnings and equities over the near term.

"However … a reacceleration of aggregate demand could lead to a second wave of inflation."

Brent rose $1.05, or 1.3 percent, to $80.99 per barrel, while West Texas Intermediate crude gained 72 cents, or 1 percent, to $74.11 per barrel.

Also working against the commodity was the U.S. dollar rising to a three-week high against the euro on Monday: "You've got a strong dollar, you're in a generally risk-off environment," explained Robert Yawger, executive director of energy futures at Mizuho.

As was the case with trading last week, the bears seemed impervious to several major bullish developments: on Sunday, Fatih Birol, executive director of the International Energy Agency, said he expects half of global oil demand growth this year to come from China, and he added that jet fuel demand was currently surging.

Also, an arguably tight global supply was exacerbated on Monday as operations at Turkey's oil terminal in Ceyhan halted when a major earthquake struck nearby.

As for the saga of the European Union seeking to punish Russia via sanctions for invading Ukraine, the EU banned Russian oil products on Sunday, causing analysts to monitor any possible price increase at the pump.

In other oil related news  and despite crude prices having fallen about 7 percent so far this year, Saudi Arabia unexpectedly raised oil prices for Asia, the U.S., and Europe.

Saudi Aramco increased its flagship Arab Light grade to $2 per barrel above the regional benchmark, 20 cents more than the price for this month; the kingdom also raised all prices for European buyers by $2 per barrel, and for the U.S. by 30 cents.

The moves were said to be driven by reports that consumption China is already on the rise and will skyrocket in the third quarter, as the country fully reopens its economy.