World oil prices opened higher in trading amid an outbreak of market optimism on the prospect of oil demand from China and tightening US oil supplies. At the time of the news, Brent Oil was up by 0.14 percent at $84.91 a barrel. 

Meanwhile, the U.S. crude was up to 0.17 percent at $79.65 a barrel. News from China became one of the main catalysts in the increase in oil prices. The reason is that the planned easing of COVID policies will revive China's economy and provide a breath of fresh air for the prospect of oil demand. 

Some analysts predict that China's move this time will lead to a complete lifting of restrictions in 2023. At the same time, United States crude oil production has been disrupted due to extreme cold weather. 

Extreme Weather maybe Last Until January 

Storms originating in the Arctic region have sent cold winds to Canada and the America. That was sending air temperatures in both countries down well below zero degrees. 

As a result, a number of oil refinery operations in North Dakota and Texas ceased operations. According to a number of experts, extreme cold weather is expected to last until January.

The disruption of cold weather inevitably has a direct impact on United States crude oil supplies. Based on the consensus of Reuters economists, the US crude stockpiles are expected to slump to 1.6 million barrels. 

In the other place, Russia Restricts Oil Sales. Meanwhile , Vladimir Putin decided to stop selling oil to countries supporting the G7 policy that previously placed price limits on Russian oil. 

Elsewhere, Yen Strengthened Significantly 

According to a Kremlin spokesman, Russia will halt oil sales as early as February. Russia's move has the potential to tighten world crude oil supplies and support the strengthening of this commodity price. 

The yen strengthened rapidly last week. That was especially after the Japan's central bank (BoJ) abruptly widened its target range of 10Y government bond yields. 

It could be seen that USD/JPY also fell by four percent on the occasion. However, this currency pair tends to climb higher in the following days. It seems that the body size of the USD/JPY bullish candlestick is getting bigger. 

That continues to happen although it has not been able to reverse the previous significant decline. Two factors are likely becoming the triggers of that condition. 

Changes of Monetary Policy Can Happen

First factor is the easing of COVID-19 quarantine rules in China has improved global market sentiment. That reduced demand for safe haven assets as well such as the yen. 

Second, the BoJ boss denied market speculation about the prospect of a policy change in the near term. Analysts have previously highlighted the possibility of monetary policy changes.

That sector can be becoming tighter following the end of BoJ Governor Haruhiko Kuroda's term in April 2023. This situation will put further pressure on USD/JPY pair. 

However, Kuroda on Monday said that the central bank would continue to maintain ultra-loose monetary policy. This is definitely not one step towards a way out of the ultra oose monetary policy. 

Will BOJ Change Their Policy? 

The Central Bank will strive to achieve its price target in a sustainable and stable manner. That is going to be accompanied by wage increases, by continuing monetary easing under the control of the yield curve (YCC).

This was said by Kuroda in a speech delivered to the Keidanren business forum. So, will the BoJ not tighten policy and the USD/JPY will continue to strengthen from here? The Analysts still disagree. Some of them maintained their hopes for post-Kuroda tightening. 

However, others predicted the BoJ would not change policy next year. People are leaning towards the scenario of the BoJ not making any more policy adjustments until the end of 2023. It was said by the analysts from Wells Fargo.