Markets Waiting on Bullish China Reopening

China intends to increase the retail price of gasoline and diesel this week in response to rising international oil prices. Gasoline and diesel prices will go up by 250 yuan (US$37) per ton and 240 yuan (US$36) per ton, respectively.

Some analysts believe global oil prices may have already reached their lowest point for 2023 if China reopens as bullishly as many expect. That would make the West Texas Intermediate (WTI) lows of three weeks ago – around US$72 per barrel – the baseline price for the year.
On Monday, Chinese officials said the COVID-19 situation in the country was at a “low level,” following the Lunar New Year holiday, signaling that after prioritizing public health over the economy, China is finally ready to open for business again.

Analysts say investors should keep an eye on the prices of metals, such as copper and iron, which have been energized by increased demand from China, while aluminum and nickel have also rallied for the same reason.

Oil markets have not yet responded as expected. After pushing above US$82 last week, the price of WTI slid to US$78 per barrel on Monday, with investors watching the Federal Reserve’s Wednesday meeting, which is expected to result in another rate hike.

China is the world’s largest oil importer, and its return to normal trading is a promising sign for prices of the commodity. However, it is not yet clear if Chinese consumer behavior will be as overwhelmingly positive as expected.