Oil closes higher with reopening of China and weaker dollar

Oil futures closed on Monday (9) at a high, after the news that China would reopen its borders to Hong Kong, which signals movements towards the end of the “covid-zero” policy in the country, and with the devaluation of the dollar boosting the commodity, since the oil is quoted in the American currency.

On the New York Mercantile Exchange (Nymex), WTI crude for February 2023 closed up 1.17% ($0.86) at $74.63 a barrel, while Brent for March, traded on the Intercontinental Exchange (ICE), closed up 1.37% (US$ 1.08), at US$ 79.65 a barrel.

On Sunday, China announced the reopening of its borders with Hong Kong, after almost three years of restrictions, in a signal of the end of the “covid zero” policy. The reopening is also a sign of stronger demand for the commodity, as the country is one of the main oil buyers. In the middle of the trading session, oil came to operate with highs of more than 3%.

According to analysis by Oanda’s Edward Moya, hopes of a reopening could help push oil prices much higher. “Oil’s downtrend was approaching critical support, so energy traders were eagerly looking for any reason to get back into oil trading,” he points out, predicting that the value of barrels could even come close to the US$ level. 90 mid-year.

In the view of Peter McNally, from Third Bridge, inventories lower than historical standards and the potential for gain from an increase in Chinese demand in the short term increases expectations of benefits for the price of oil. “If Western economies experience reopening in the same way in China, Brent oil prices could quickly reach $100 as we approach the summer season.”

*With information from Dow Jones Newswires.