Oil prices are on the rise again, bouncing back after slipping below $70 a barrel. However, the market continues to face challenges due to the subdued outlook for oil demand. The prospects for weak economic growth in the coming quarters, coupled with the aftermath of interest rate increases by central banks worldwide over the past two years, are weighing on crude prices. Adding to the concern is the slow recovery of China's economy following the end of Covid-19 lockdowns last year.
According to Sophie Lund-Yates, an analyst at Hargreaves Lansdown, a prolonged period of weak demand would have far-reaching implications across various markets, casting doubt on the future of sectors ranging from oil to luxury goods.
Despite the recent agreement by the Organization of the Petroleum Exporting Countries (OPEC) to implement further production cuts, oil prices continue to decline. However, these efforts to restrict supply may help establish a floor under prices, preventing them from plummeting further.
As of now, West Texas Intermediate, the U.S. standard, has risen by 0.9% to reach $69.99 a barrel. Similarly, Brent crude, the international standard, has climbed by 1% to reach $75.06 a barrel.