Oil's roundtrip back to $100. Why China could determine what happens next

U.S. crude closed above $102 per barrel on Thursday, marking its highest settlement since May. The rally now hinges on demand signals from China, which could determine whether oil sustains the move or tests wartime highs reached earlier this year.

The $102 close represents a full roundtrip from lows earlier in the cycle, driven by tightening supply dynamics and geopolitical uncertainty. China's economic recovery trajectory and crude import appetite will serve as the critical variable for whether prices hold above the century mark or push toward the $120-plus levels seen during the initial stages of the Russia-Ukraine conflict.

OPEC+ production cuts continue to limit global supply, while refinery maintenance seasons in key consuming regions add near-term support. However, Chinese demand—historically the largest swing factor in global oil markets—remains the linchpin for sustained upside. Weaker-than-expected industrial activity or property sector stress could cap the rally, while aggressive fiscal stimulus would reinforce the bullish case.