By Adedapo Adesanya
Oil prices were in the positive territory on Monday as the Brent crude gained 69 cents or 0.61 per cent to trade at $113.20 per barrel and the United States West Texas Intermediate (WTI) rose by 45 cents or 0.8 per cent to $110.70 per barrel.
The commodity settled higher as the market turned its attention away from multiple bearish factors to Shanghai preparing to reopen after a two-month coronavirus lockdown that fuelled economic growth fears.
Lockdowns in China, the world’s top oil importer, have hammered industrial output and construction and now Shanghai, China’s commercial hub, aims to normalize life from June 1 as its coronavirus caseloads decline.
The market welcomed the move that China will take targeted steps, including broadening its tax credit rebates, and rolling out new investment projects, to support its economy.
The market also gained mobility data showed that more people were on the roads in places such as the US, a positive sign for demand amid soaring prices for gas, as petrol is called in the country.
However, the space continues to face multiple bearish influences with Hungary holding out against a proposed European Union ban on Russian oil imports over its invasion of Ukraine, ensuring no sudden shock to supply for now.
The union’s inability to reach a final agreement on banning Russian oil after its invasion of Ukraine has also stopped oil prices from climbing much higher.
Among the 27 EU member states, Hungary is the most vocal critic of the planned embargo on Russian oil which proposes phasing out imports by the end of the year.
Hungary, which is Russia’s closest ally in the EU has said it wants hundreds of millions of euros from the bloc to mitigate the cost of ditching Russian crude.
Since the EU needs all 27 states to agree to the embargo for it to go ahead, it has not been able to achieve the move that will make prices soar higher.
Meanwhile, at the annual World Economic Forum in Davos, Switzerland, the world’s think tanks raised issues about the threat to the global economy with some flagging the risk of a worldwide recession.
International Monetary Fund (IMF) Managing Director, Ms Kristalina Georgieva said she did not expect a recession for major economies but could not rule one out.
Asked at a panel at the Davos economic summit whether she expected a recession, Ms Georgieva said, “No, not at this point. It doesn’t mean it is out of the question.”
The global economic outlook has darkened in the month since the IMF downgraded its 2022 growth outlook because of the war in Ukraine, China’s slowdown, and global price shocks