PremiumNEW DELHI : International oil prices rose over 3% on Monday as travelers flocked to China after its boarders opened after a gap of three years.
China has reopened its borders to international visitors for the first time since it imposed travel restrictions in March 2020 amid the first wave of Covid-19. China is the second largest importer of crude oil and easing of travel restrictions in the country lift hopes for improvement in fuel demand.
Around 7 pm, the March contract of Brent on the Intercontinental Exchange was trading at $80.94 per barrel, higher by 3.02% from its previous close and the February contract of West Texas Intermediate (WTI) on the NYMEX rose 3.25% to $76.17 a barrel.
Ravindra V. Rao, head of commodity research with Kotak Securities said: “Crude oil prices are trading higher as China opened borders that have been shut since the start of the COVID-19 pandemic, leading to streaming travelers streamed into China by air, land and sea, and boosting prospects for transportation fuels. Economic activity in major global nations will set the pace for oil prices going forward."
Further, hopes for a lesser aggressive approach by the US Federal Reserve in terms of interest rate hikes going ahead, have also boosted the investor sentiments, experts said.
The surge in oil prices comes after an over 8% slump last week. Rahul Kalantri, vice president for commodities at Mehta Equities Ltd noted that crude oil prices fell last week amid recession fears and increased crude oil stocks in the US.
Going ahead the market may continue to remain volatile as concerns remain over a likely increase in Covid infection globally with the opening of Chinese borders.
Kalantri said: “We expect crude oil prices to remain volatile this week and bargain buying and short coverings could support prices."