Crude Oil Procures Greater Ground on Expectations of a China Re-Opening

Crude oil has been buoyed through the Asian session by a cheery outlook. Hopes are growing that Chinese demand could pick up as they continue to relax some of their Covid-19 restrictions.

Hong Kong abandoned its three-day monitoring period for new arrivals in the territory today. The WTI futures contract is near US$ 74 bbl while the Brent contract is nudging US$ 79 bbl. Recent cold weather in the northern hemisphere also underpinned energy markets.

APAC equities generally spent most of Tuesday slightly in the green after a strong lead from Wall Street. US stocks appeared to be scoping out a potential soft US CPI later today that added to positive sentiment.

Several forecasters are looking at 7.3% year-on-year headline CPI against 7.7% previously. A notable deviation from these expectations might see the market re-price its thinking of what the Federal Reserve will do with monetary policy later in the week.

Elsewhere, yet another flashpoint appears to be heating up in the US-China relationship.

Washington has requested that leading chip makers in the Netherlands and Japan curb supplying their technology to Beijing with the aim of inhibiting Beijing’s military capabilities.

China has responded by lodging a formal complaint with the World Trade Organization (WTO). The US maintains that it is a national security issue.

Treasury yields eased slightly across the curve through the Asian session after small gains overnight. Currency markets have been very quiet so far today. Gold is steady near US$ 1,780 an ounce after losing ground yesterday.

Looking ahead, the UK will see jobs data, Italy will get industrial production figures and Germany will see CPI and the ZEW survey. The focus is of course US CPI which will be released at 1330 GMT.