Oil News: China’s Policy Shift and Middle East Turmoil Lift Crude Prices by 1%

Oil Prices Edge Higher with Focus on China’s Policy Shift and Middle East Uncertainty

Oil prices gained over 1% on Monday, rebounding from recent losses as markets digested signals of monetary policy easing in China and geopolitical developments in the Middle East. Traders remain cautious, eyeing key resistance levels and potential downside risks in light of subdued demand indicators.

At 11:15 GMT, Light Crude Oil futures are trading $68.05, up $0.85 or +1.26%.

China’s Policy Easing Provides a Boost to Oil Markets

China, the world’s top oil importer, announced its first “moderately loose” monetary policy shift since 2010, as state media cited the Politburo’s decision to stimulate growth amid a faltering economy. The move comes as China’s property market struggles, eroding consumer confidence and consumption.

UBS analyst Giovanni Staunovo emphasized that China’s easing measures are driving improved risk sentiment, lifting crude prices. However, last week’s decision by OPEC+ to delay planned production increases until April highlights lingering concerns over demand softness.

Middle East Instability Adds to Geopolitical Risk Premium

Uncertainty surrounding the Middle East escalated after Syrian rebels announced the overthrow of President Bashar al-Assad on Sunday. This sudden development ended a 50-year dynasty, adding to the region’s existing political and economic instability.

Tomomichi Akuta of Mitsubishi UFJ Research noted that these geopolitical risks are bolstering crude prices but warned that Saudi Arabia’s recent price cuts and extended OPEC+ output constraints underscore weak demand fundamentals, especially from China.

Key Technical Levels in Focus for Traders

West Texas Intermediate (WTI) crude oil futures are trading cautiously after a three-day losing streak. Prices face significant resistance at the Fibonacci level of $69.11 and the 50-day moving average of $70.04. Downside risks remain pronounced, with last week’s low of $66.98 acting as a critical support level. Breaches could expose further declines toward $66.53 and $65.65.

Upcoming Data and Market Sentiment

Traders are closely watching U.S. inflation data set for release on Wednesday, which will provide fresh insight into the Federal Reserve’s monetary policy trajectory. Any indication of prolonged interest rate hikes could weigh on oil demand projections.

Market Forecast: Bearish Sentiment Remains Despite Short-Term Gains

While Monday’s rebound reflects optimism from China’s policy shift and geopolitical uncertainty, weak demand signals, notably from China and Asia, coupled with Saudi Aramco’s price cuts, suggest bearish sentiment may dominate in the near term. Oil prices are likely to face continued pressure unless clearer signs of demand recovery emerge.

More Information in our Economic Calendar.