Oil futures open interest rises as markets await OPEC+’s response.
The futures on crude oil are once again arousing the interest of investors. According to experts, China’s abandonment of the zero-Covid policy has stimulated the demand for oil. Open interest in oil futures contracts surged to 6-month highs. The major OPEC+ exponents are confident about the achievement of an equilibrium of the oil market in 2023.
What’s happening to oil futures?
2022 was a particular year for the oil price which underwent significant fluctuations due to economic instability and geopolitics of most developed economies. However, the recovery of the Chinese demand following the cancellation of the rigid restrictions due to the zero-covid policy pushed the price of oil upwards. Specifically, WTI rose almost 1% on Tuesday, attracting particular interest among the commodity traders public.
The Chinese economy seems to have put its foot on the accelerator and for many experts the increase in exports of products and the increase in consumer demand will be the reason for growth in the price of crude oil. Furthermore, the prospect of accommodation by the Fed on its monetary policy plays in the favor of commodity growth, especially oil.
Meanwhile, open interest hits highs of June 2022 confirming increased trader sentiment regarding a bullish expectation for oil futures. The era of illiquid contracts that characterized the entire second half of 2022 seems to be over. The opinion of some investment banks is also extremely bullish towards commodities: Goldman Sachs Group sees China as the primary reason for raw materials restart in 2023.
Will the price of oil go up? What OPEC+ claims
The opinion of OPEC+ officials confirms the general market sentiment. The top OPEC+ official was "cautiously optimistic" about the future outlook for the global economy. OPEC+ in 2022 has repeatedly announced significant cuts in production to avoid excess demand and according to the organization the market will finally reach a equilibrium in 2023.
However, persistent economic slowdown and inflation in advanced economies are clouding the outlook, according to OPEC+ Secretary General Haitham Al-Ghais. Key OPEC+ officials will meet on February 1 to contextualize and assess market conditions while making important decisions about what to do next. According to the January Monthly Oil Market Report OPEC+ could face a slight surplus assuming it continues to produce at current rates. For this reason, the markets are waiting with great interest to find out the decisions of the organization after the February meeting.
Original article published on Money.it Italy 2023-01-18 15:59:19. Original title: La riapertura della Cina spinge in alto il prezzo del petrolio
