Oil climbed from a low of $95.2 per barrel to Tuesday’s high of $102.70 as Chinese Covid-19 cases dropped to a three-week low and with assurances from China’s central bank of economic support easing fears that a new round of lockdowns will slash demand for crude, reported Bloomberg.
Covid-19 cases in China fell to their lowest level in three weeks as Beijing rolled out testing to stamp out the virus before it results in the kind of lockdowns that have forced manufacturing to shut down in Shanghai, reported The Wall Street Journal.
The resurgence of Covid-19 has hammered fuel consumption in the world’s second-largest economy, reported Bloomberg.
“Crude prices rebounded after China’s PBOC [People’s Bank of China] increased efforts to calm markets. Energy traders are taking a break from the demand destruction trade while everyone awaits the results of China’s mass Covid tests,” Bloomberg said, quoting Oanda senior market analyst Ed Moya.
Chinese demand and Russian supplies are traders’ main concerns as the Ukraine war stretches into its third month.
As crude prices stay around $100 per barrel, key market indicators in Europe are weakening in response to softer Chinese consumption, Bloomberg added, while around the world, inflationary pressures are rising, forcing central banks to consider tightening their monetary policies.
According to technical analysis, oil price traded in the range of April’s high-low of $92.88-$109.20 per barrel, then found support this week at $92 and continues to rally at around $102 per barrel.
For this week’s trading recommendation, investors could buy now or wait and buy at $100 per barrel and set a stop-loss function at $98 per barrel and a take-profit at $105.