After a sharp decline in previous trading session, oil prices are back on the rise Wednesday morning on expectations of increased demand from China, reports Reuters.

After trading at the Danish stock exchange closed Tuesday afternoon, oil prices went down, which led investment economist at Nordnet Per Hansen to attribute it to recession fears and accompanying lower demand.

A barrel of European benchmark crude Brent goes for USD 79.48 against USD 81.20 Tuesday afternoon. Meanwhile, US benchmark West Texas Intermediate trades for USD 74.28 per barrel against USD 75.72 Tuesday afternoon.

For the second day in a row, China has reported a drop in new Covid-19 infection cases.

”China has (been) rapidly eased COVID-19 restrictions, which may boost demand,” states market analyst at CMC Markets Leon Li to the Reuters.

This adds to market uncertainty as to how Western nations’ price cap on Russian oil will affect supplies.

Right now the price of Russian oil is below the cap that has been instituted.

According to Russian media Vedomosti, Russia is examining various options for how the nation is to respond to the price ceiling, which results in major market fluctuations.

According to Per Hansen, commodities prices have become speculative investments that react in a short-sighted manner and mostly on the development of risk premiums rather than economic key figures.

Major daily fluctuations, as in multi-percentages, have become commonplace in the market, he says.

Elsewhere in the commodities market, a troy ounce of gold costs USD 1,772.85 Wednesday morning against USD 1,774.26 Tuesday afternoon.

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