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Oil prices bounced back in early Asian hours on Monday. The surge came after the strength of the US dollar eased.
It also coincided with investors awaiting for data from China to gauge demand at the world’s top crude oil importer.
Brent crude futures rose by around 0.9 percent or 85 cents (76 pence).
The increase came after it took a 6.4 percent hit last week.
Meanwhile, US West Texas Intermediate witnessed a spike of 73 cents (65 pence), also 0.9 percent, following a 7.6 percent drop last week.
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Investors were put at ease by a number of factors, including Chinese President Xi Jinping.
Xi made remarks to delegates at the Party Congress which reassured accommodative policies for the economy, a positive sign for demand outlook, according to CMC analyst Tina Teng.
She said: “US dollar index futures were lower today, which also provided a rebounding opportunity for the oil markets.”
A weakening in the US dollar is supposed to make oil more affordable for other currencies.
Despite the spike, prices are expected to remain volatile as OPEC+ cuts back on production.
A strong US dollar and further interest rate increases from the Federal Reserve will also limit potential price gains.
St Louis Fed President James Bullard said inflation had become “pernicious” and difficult to arrest.
He went on to claim that this warranted continued “frontloading” through larger increases of three-quarters of a percentage point.
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Speaking to Reuters, Bullard added: “I do think 2023 should be a data-dependent sort of year. It’s two-sided risk.
“It is very possible that the data would come in a way that forces the (Federal Open Market) Committee higher on the policy rate.
“But it’s also possible that you get a good disinflationary dynamic going, and in that situation the committee could keep the policy rate and hold it steady.”
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