Oil rises to three weeks highs as China reduces COVID curbs.
Brent crude rose 22 cents or 0.3 percent, at $84.14 at 911 GMT in the U.S. U.S. West Texas Intermediate crude climbed 7 cents to $79.63.
The price of oil hit a three-week peak on Tuesday, as China’s recent ease in COVID-19 restrictions boosted the hope of a fuel demand growth, with additional assistance coming from reductions on U.S. energy production caused by winter storms.
China will no longer require new travelers to undergo quarantine beginning on Jan. 8th The National Health Commission said on Monday in a major move toward easing restrictions on borders that have been closed since.
Brent crude rose 22 cents (or 0.3 percent, to $84.14 at 911 GMT as well U.S. West Texas Intermediate crude was up 7 cents, or 0.3%, to $79.63. Both benchmarks reached their highest levels since December. 5 earlier in the day.
Oil hits three-week high as China eases COVID curbs https://t.co/hOFnjABoA7
— Adi Imsirovic (@AdiSurreyEnergy) December 27, 2022
“This is certainly something that traders and investors have been hoping for,” Avatrade analyst Naeem Aslam said about China’s plans for the quarantine rules.
UK along with U.S. markets had been closed on Monday due to the Christmas.
Equities gained as their U.S. dollar softened on Tuesday, in response on the Chinese move. A lower dollar means oil is cheaper for those who hold other currencies and is a good way to favor risky assets.
The oil market also received support from fears of disruptions in supply due to winter storms that hit the United States, said Kazuhiko Saito, chief analyst of Fujitomi Securities.
“But the U.S. weather is forecast to improve this week, which means the rally may not last too long,” he added.
As of Friday, around 1.5 million barrels refining capacity per day throughout the U.S. Gulf Coast was closed, and gas and oil production across North Dakota to Texas suffered freezing, reducing production.
The fear of the possibility of a cut in production by Russia has also boosted prices.
Russia could cut its oil production by 5 to 7 percent in the first quarter of 2023, in response to price cap as well, according to RIA news agency reported Vice-Prime Secretary Alexander Novak as saying on Friday.