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Crude oil prices surge amidst economic optimism in USA and China!

Crude oil prices surge

Despite surprising investors, Friday's PPI inflation readings from the USA failed to deter the market's continued adherence to the upward trend set in motion since December 2023.

This resilience is largely attributed to the optimistic outlook regarding the anticipated economic resurgence in both the USA and China. As a result, market dynamics once again pivot around the pivotal role of demand, with analysts forecasting a potential return of crude oil prices to approximately $100 per barrel by 2025.

Beginning from February, the trajectory of crude oil prices has been consistently upward. The price of WTI crude oil has now breached the $78 per barrel mark, while Brent crude oil prices are oscillating within the range of $83 to $84 per barrel, indicating a sustained bullish sentiment in the market.

Although the strength of the US dollar exerts downward pressure on commodity prices, the latest pronouncements from the OPEC cartel, coupled with the decline in fuel inventories in the USA, effectively underpin buyers' confidence. Their confidence stems from the belief in the forthcoming economic resurgence expected in both the USA and China throughout 2024.

While the robustness of the US economy is indisputable, evidenced by recent positive indicators such as robust job market figures, GDP growth, and controlled inflation rates, China remains a lingering concern in the global economic landscape.

As one of the foremost players in the global economy, China's role in shaping oil prices cannot be overstated. It's imperative to highlight the statistics pertaining to China's December and annual crude oil imports.

In December alone, China imported approximately 48.36 million tons, equivalent to around 11.39 million barrels per day, marking a significant uptick compared to November's figures of 10.33 million barrels per day.

Equally compelling is the annual perspective, with China's total crude oil imports for 2023 soaring to 563.99 million tons, averaging an impressive 11.28 million barrels per day – a historic zenith. This surpasses the previous record set in 2020, which stood at 10.82 million barrels per day.

The substantial surge in crude oil imports to China throughout the preceding year was chiefly fueled by heightened demand for fuel, stemming from the country's relaxation of stringent pandemic restrictions in November 2022.

From January to November 2023, traffic on Chinese highways skyrocketed by an astonishing 43.6% year-on-year. Furthermore, the volume of flights within China witnessed a notable uptick, soaring by 27% compared to the previous year.

Notably, this surge in mobility primarily pertained to domestic travel, while international flights experienced a marginal rebound.

Irrespective of short- and medium-term forecasts, analysts unanimously posit that the imminent economic resurgence should provide the necessary impetus for crude oil to reclaim the $100 per barrel threshold, reminiscent of the levels observed in July 2022.

oil prices analysis, forex trading
XTI/USD daily chart, MetaTrader, 20.02.2024



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