Oil closed at the highest level since August as markets rallied over China easing its COVID-19 restrictions.
West Texas Intermediate for December delivery rose 5.04 percent to US$92.61 a barrel, while Brent crude for December delivery increased 4.12 percent to US$98.57 a barrel for a third straight weekly gain.
China is said to be working on plans to scrap a system that penalizes airlines for bringing COVID-19 cases into the country, a move that suggests the nation may be easing its ‘zero COVID” policy, paving the way for higher crude demand.
Photo: Reuters
Oil has struggled to find direction in the past few sessions, with lackluster trading volumes rendering futures especially susceptible to macro market moves. Adding to volatility is the push and pull between a tightening supply outlook and concerns over a global economic slowdown.
The prospect of renewed demand from China, the world’s biggest crude importer, is propelling futures to levels not seen since August, while new Russian sanctions taking force next month are also bullish for crude.
“There are too many geopolitical risks on the table — that should keep oil’s trajectory higher,” Oanda Corp senior market analyst Edward Moya said. “If the dollar continues to slide here, oil’s strength could be relentless.”
China’s COVID-19 strategy, which relies on lockdowns and mass testing to stamp out infections, has weighed on the nation’s economy and on the crude market.
Oil demand this year is seen falling by 400,000 barrels a day due to the virus curbs, Bank of China International Ltd Analysts said.
“With China easing some COVID restrictions, especially for air travel, most traders are taking the news as a positive pull to demand in the near future,” Bok Financial Securities senior vice president Dennis Kissler said.
Additional reporting by staff writer
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