Oil prices rose by 3% on Monday, a welcome relief after weeks of volatility. The increase was largely attributed to China’s move to reopen its borders which has improved the outlook for fuel demand. This comes as Iraq’s Karbala refinery is set to begin production in mid-March, which could further bolster demand for oil.
In addition, the US Department of Energy rejected the first batch of bids from oil companies to resupply a small amount of oil to the nation’s emergency crude oil stockpile in February. This is a sign that the US is looking to prevent a further decline in oil prices, and is likely to be a positive factor for the oil market.
However, despite the rise in oil prices, global recession concerns are still looming. There are concerns that the coronavirus pandemic will continue to affect the global economy, leading to a further decline in demand for oil. This could have a negative impact on oil prices, and could put a dent in the recent gains.
Despite these concerns, it is clear that the outlook for oil prices is improving. The reopening of China’s borders and the start of production at Iraq’s Karbala refinery both suggest that demand for oil is likely to increase in the coming months. In addition, the US Department of Energy’s decision to reject bids for oil supply suggests that it is looking to prevent a further decline in oil prices.
All in all, the outlook for oil prices remains uncertain, but the recent developments suggest that demand for oil is likely to rise in the coming months. This should help to offset some of the negative impacts of the coronavirus pandemic, and could support oil prices in the near-term.