The rise in oil prices amid optimism about the recovery of demand in China
Oil prices regained their strength, Monday, after falling by more than two dollars a barrel in the previous session, amid optimism that China would lift Corona restrictions and recover oil demand, which overshadowed fears of a global recession.
Brent crude futures rose 72 cents, or 0.9%, to seventy $9.76 a barrel by 0103 GMT, while US West Texas Intermediate crude was $74.89 a barrel, up 60 cents, or 0.8%.
China, the world’s largest importer of crude oil and the second oil consumer, is witnessing the first of 3 expected waves of coronavirus cases after Beijing eased movement restrictions.
“Despite the increase in Covid cases, optimism stemming from reopening and policy easing (related to Covid) is improving the outlook for oil demand,” said CMC Markets analyst Tina Teng.
On Friday, Chinese business news outlet Caixin reported that China plans to increase flights with the aim of restoring the country’s average daily passenger flight volume to 70% of 2019 levels by January 6.
China’s exports of diesel and gasoline continued to rise in November, reaching their highest level in more than a year, as refiners scrambled to use up their 2022 export quotas and sell growing inventories.
Brent and West Texas Intermediate rose more than 3% last week as a pipeline from Canada to America remained closed, with operator TC Energy focusing on removing an oil spill. The closure of the pipeline, which transports 622 thousand barrels per day of Canadian crude to US refineries, supported the prices of heavy US crude grades.
The announcement by the US Department of Energy, Friday, that it will start buying back crude oil in order to strengthen the Strategic Petroleum Reserve, also supported expectations of higher prices.
This will be the US’s first purchase since releasing 180 million barrels of storage this year, which is a record amount.