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High Potential for Oil Demand Recovery in China to Pre-crisis Levels

3/3/2023 12:48 PM

Benchmark Brent Crude Oil prices are correcting slightly above 84.00.

The market is trading steadily against the backdrop of positive fundamental factors: for example, investors hope for a more rapid recovery in demand for hydrocarbons from China, which, after the removal of anti-COVID restrictions, is gradually returning to previous levels of activity. The statistics on business activity in the leading sectors speak in favor of the upward dynamics: the indicator in the services sector rose to 55.0 points from 52.9 points earlier, and in the manufacturing sector – up to 52.6 points from 50.1 points earlier. The non-manufacturing segment also showed improvement: PMI increased to 51.6 points from 49.2 points earlier. Thus, the composite value rose to 56.4 points in February from 52.9 points earlier, which speaks in favor of strengthening production and demand for raw materials.

Meanwhile, energy supply remains at record levels, as evidenced by data on oil stocks in the United States: according to the report of the American Petroleum Institute (API), the figure rose by 6.203M barrels after an increase of 9.895M earlier, and data from the Energy Information Administration of the Department of Energy The US (EIA) is talking about an increase in the value of 1.165M barrels after last week's positive dynamics at 7.648M barrels.


On the daily chart, the trading instrument moves within the local Triangle pattern, moving toward the resistance line.

Technical indicators are in a poor sell signal, preparing for a reversal: fast EMAs of the Alligator indicator are approaching the signal line, and the AO histogram is forming upward bars below the transition level.

Resistance levels: 86.40, 91.00. | Support levels: 82.30, 76.60.


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