China: On Monday, oil prices took a downward turn as investors pondered the prospects of tighter US monetary policies. West Texas Intermediate (WTI) fell to around $74 per barrel, having closed up just 1.2% less than 24 hours prior. Two Federal Reserve officials had stated that the Fed could be required to raise its interest rates higher than 5% in order to effectively combat inflation. This news weighed heavily on Asian stocks and other commodity prices in addition to oil. Despite this, optimism about a recovery in Chinese demand for crude appeared to remain strong.

The price of oil saw an impressive surge as Beijing rolled out its second import quota for 2023, offering generous provisions to refiners and traders. This move comes after China's successful implementation of more relaxed Covid restrictions in the last year 2022 and is seen by many as a sign that Asia's largest economy is preparing for a period of growth. With this announcement, investors remain optimistic that strong Chinese demand will drive up the global market price of oil.

According to Warren Patterson, the head of commodities strategy at ING Groep NV located in Singapore, a decline in dollar value and increased positivity revolving around the Chinese demand narrative has provided some buoyancy to oil prices. Despite this, Patterson suggests that the market still seems to be adequately stocked with long-term supplies, implying that short-term price movements are unlikely to be significantly affected.

The beginning of the year has not been a promising one for crude, as low liquidity levels magnify uncontrollable price fluctuations and forward curves indicate an abundance of supply. An uptick in Russian oil exports was experienced last week, but due to a decreased number of buyers this was not enough to turn around the reduction in shipments.