By Yasin Ebrahim
Investing.com -- Oil prices swung widely before settling higher Monday, as investors weighed up the prospect of a China-led boost to energy demand against jitters that the global economy is headed for a bumpy ride amid ongoing central banks rate hikes.
On the New York Mercantile Exchange crude futures rose about 90 cents to settle at $75.19 a barrel, while on London's Intercontinental Exchange, Brent gained 76 cents to settle at $80.000 a barrel.
China, the world’s top crude oil importer, vowed to roll out support for its economy to offset the impact of COVID-related disruptions after a U-turn on its COVID-zero policy led to a surge in cases. This wave of infections is expected to be the first of three waves this winter, but Beijing's pledge of economic support stoked hopes that energy demand would remain steady.
Some, however, remain optimistic that demand will not only remain steady but increase and outstrip supply, delivering a boost to oil prices.
"[T]he current price weakness is only short-lived and expect a significant price recovery in the coming months. By the middle of the year, a barrel of Brent oil should cost USD 95 again," Commerzbank said in a recent note, citing expectations for an increase in oil demand. "Global oil demand at the end of 2023 is expected to be 2.5 million barrels per day (bpd) higher than it is currently, suggesting demand is likely to exceed supply again from the middle of 2023 and beyond," it added
But mounting concerns about the global economy continue to cast a shadow on demand. "[A] global recession is assured and largely driven by dramatic slowdowns in China and Western Europe," Scotiabank Economics said in a note. The U.S. is expected to enter a "technical recession," Scotiabank Economics adds, driven by "aggressive monetary policy tightening and an equity market correction."