Oil prices rose on Tuesday, after two days of losses, as investors continue to assess potential European sanctions on Russian energy and the impact of China’s Covid-19 outbreak on global demand for crude.
Brent, the global benchmark for two thirds of the world's oil, was trading 1.2 per cent higher at $103.50 per barrel at 8.30am UAE time. West Texas Intermediate, the gauge that tracks US crude, was 0.9 per cent higher, but still below the $100 level, at $99.45 a barrel.
"The black gold is moving to the upside today, and traders feel less anxious about Chinese demand. One thing that traders will be looking at very closely regarding oil demand is the outcome of the mass Covid testing that is taking place across China's largest cities," said Naeem Aslam, chief market analyst at Avatrade.
"If the results are unsatisfactory, the government could force a lockdown which will be highly disastrous for oil demand. On the positive side, if the results continue to suggest that things aren't worse, we could see a strong rally in oil prices."
Oil prices have taken a battering in recent weeks amid concerns for demand outlook and co-ordinated efforts by the US and the International Energy Agency to improve supply.
Crude prices, which rose close to $140 per barrel last month after western sanctions were imposed on Russian energy imports due to Moscow’s military action in Ukraine, have given up the most gains. But traders expect prices to shoot higher again as the US and its allies consider widening their sanctions to include Russian oil and gas exports.
Although oil markets were sold heavily on the “China risk-aversion trade, as growth fears fed through to lower oil demand calculations”, geopolitical risks remain, said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda.
“I have reservations that potential European energy sanctions on Russian oil and natural gas can be ignored for long. Nor can the impact from the Ukraine war and Russia’s exclusion from global energy markets,” Mr Halley said.
“Weaker China growth or not, energy supplies remain constrained with geopolitical risks very elevated. The week also has plenty of binary outcome risk from the week’s data calendar internationally, especially US earnings, which could swing prices either way.”
China, the world’s second-largest economy and biggest crude importer, is experiencing a wave of Covid-19 infections and has introduced strict movement curbs in Shanghai, its largest city, to control the spread of coronavirus.
New cases have also been detected in China’s capital Beijing as the government continues to carry out mass testing to isolate every infected person as part of its “zero-Covid” strategy.
Officials on Monday said they will widen the mass testing campaign to millions more in an additional 11 of Beijing’s 16 districts. A weeklong lockdown in Shanghai is also stoking concerns about the country's oil demand outlook.
Earlier this month, the IEA cut its demand forecast for 2022 due to Covid-19 lockdowns in China and weaker-than-expected demand growth in advanced economies, especially the US.
Opec has also lowered its supply and demand forecasts, in its monthly market report, over concerns about the Russia-Ukraine war and lockdowns in China that could stymie consumption.
Mr Halley, however, said despite lower demand projections, Brent will remain in a $100-$120 per barrel range, with WTI trading in the $95-$115 range.
“I am sticking to my guns”, he said. “That said, a few more negative headlines from Beijing regarding Covid restrictions could shift the balance decisively lower this week.”
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Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
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Don’ts
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
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RACE RESULTS
1. Valtteri Bottas (FIN/Mercedes) 1hr 21min 48.527sec
2. Sebastian Vettel (GER/Ferrari) at 0.658sec
3. Daniel Ricciardo (AUS/Red Bull) 6.012
4. Lewis Hamilton (GBR/Mercedes) 7.430
5. Kimi Räikkönen (FIN/Ferrari) 20.370
6. Romain Grosjean (FRA/Haas) 1:13.160
7. Sergio Pérez (MEX/Force India) 1 lap
8. Esteban Ocon (FRA/Force India) 1 lap
9. Felipe Massa (BRA/Williams) 1 lap
10. Lance Stroll (CAN/Williams) 1 lap
11. Jolyon Palmer (GBR/Renault) 1 lap
12. Stoffel Vandoorne (BEL/McLaren) 1 lap
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The biog
From: Upper Egypt
Age: 78
Family: a daughter in Egypt; a son in Dubai and his wife, Nabila
Favourite Abu Dhabi activity: walking near to Emirates Palace
Favourite building in Abu Dhabi: Emirates Palace
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FA Cup semi-finals
Saturday: Manchester United v Tottenham Hotspur, 8.15pm (UAE)
Sunday: Chelsea v Southampton, 6pm (UAE)
Matches on Bein Sports
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
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Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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South Korea
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The Greatest Royal Rumble card as it stands
The Greatest Royal Rumble card as it stands
50-man Royal Rumble - names entered so far include Braun Strowman, Daniel Bryan, Kurt Angle, Big Show, Kane, Chris Jericho, The New Day and Elias
Universal Championship Brock Lesnar (champion) v Roman Reigns in a steel cage match
WWE World Heavyweight ChampionshipAJ Styles (champion) v Shinsuke Nakamura
Intercontinental Championship Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
United States Championship Jeff Hardy (champion) v Jinder Mahal
SmackDown Tag Team Championship The Bludgeon Brothers (champions) v The Usos
Raw Tag Team Championship (currently vacant) Cesaro and Sheamus v Matt Hardy and Bray Wyatt
Casket match The Undertaker v Chris Jericho
Singles match John Cena v Triple H
Cruiserweight Championship Cedric Alexander v tba
Sholto Byrnes on Myanmar politics
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
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- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
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MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
