Oil Prices Remain Supported By Tighter Supply And China Travel Hopes
On Tuesday, there were signs of some buying pressure in the oil amid the recovery of the Chinese travel demand. In addition, the oil supply is also expected to shrink in the coming months.
Both of these factors are expected to support oil prices throughout 2023. Especially as the Chinese travel demand packs pace, it will also lead to higher crude oil consumption.
And once we get more clues about the health of the US economy and consumer spending, we will get to see more waves in the oil industry.
Chinese Airlines Have Starting Hiring Drives
To keep up with the massive travel demand (expected) this year, major Chinese airlines have already started major hiring drives. To make things even more exciting, even the country-wide anti-COVID measures in China are relaxed, which will also bring up crude oil consumption.
However, there's one economic indicator that shows a worrying picture for crude oil. Recently, the inflation data from China was weaker than the market expectations. Now, that's an indication that the economic recovery is going at a much slower pace!
But despite this setback, the recently announced production cut by OPEC+ ( Organization of Petroleum Exporting Countries and Allies) is also adding strength to the crude oil.
At the time of writing this, WTI futures were trading at $80.25 while the Brent Oil futures were trading at $84.68.
Looking ahead, the US interest rate decision will also have a near-term impact on crude oil prices. A higher interest rate will suppress the economic activities in the USA, which will have a bad effect on oil consumption.
But for the most part, the outlook for crude oil is bullish for the year 2023. But we can't say the same for a long-term period (several years) as the shift towards green energy, and EVs has already started to pick some serious pace.