Oil futures: Brent slips to around $84/b, China optimism seen broadly intact
Quantum Commodity Intelligence - Crude oil futures Monday were drifting lower and although largely consolidating the previous week's solid gains, although doubts over the speed of China's recovery have crept in as Covid remains a concern despite cases being on a downward trajectory.
March ICE Brent futures were trading at $84.19/b (2045 GMT), compared to Friday's settle of $85.28/b.
At the same time, Feb23 NYMEX WTI was trading at $78.85/b versus Friday's settle of $79.86/b, while the Mar23 contract was trading at $79.11/b versus Friday's $80.11/b.
Oil benchmarks surged by over 8% last week on what was broadly seen as a successful reopening of the Chinese economy, with mobility levels sharply higher.
"Rising optimism of stronger demand in China as it reopens its economy boosted sentiment across the sector last week. That was aided by a weaker USD, which supported investor interest," said ANZ commodity strategist Daniel Hynes.
Personal mobility in China is higher at this stage in the Lunar New Year festival than in any of the last four years, according to data from the search engine Baidu, as wide-ranging relaxations to the government's strict zero-Covid policy take effect.
Air passenger volumes in China have recovered to 63% of 2019 levels since the annual travel season began on 7 January, the industry regulator said on Friday.
Gasoline and distillates both rallied strongly last week on growing optimism over China's recovery, with cracks rebounding.
Some concerns still linger as China reported Saturday that nearly 60,000 patients with Covid-19 had died in hospitals since it abandoned its zero-Covid policy last month. However, officials said over the weekend that cases and emergency hospitalisations had peaked, with further declines expected.
Previously, only 37 deaths had been reported in the month since 8 December, according to data from the Chinese Center for Disease Control and Prevention (CDC).
Sentiment was also boosted last week on expectations of the Federal Reserve moderating future interest rate hikes after slowing inflation, while the Dollar Index eased to a fresh 9-month low of under 102 points early Monday, making dollar-denominated oil imports cheaper.
Geopolitical tensions were briefly heightened over the weekend after an explosion on a pipeline carrying gas from Lithuania's Baltic port of Klaipeda to neighbouring Latvia but have since been attributed to a technical malfunction rather than sabotage.
US markets were closed for a holiday Monday, while later this week, both the IEA and OPEC will release monthly reports.
