Oil prices rose for the third session in a row thanks to expectations of growth in demand in China as a result of changes in the authorities’ policy to combat COVID-19, as well as new measures to support the economy.
Last week Beijing announced a cut in mass testing of people for the coronavirus as well as the dissolution of “quarantine camps”. On Saturday, authorities said they were planning further gradual changes that would make the covid restrictions more focused, but not softer.
“China’s adjustment of its ‘zero tolerance’ coronavirus policy sends a strong signal to the oil market,” notes SPI Asset Management analyst Stephen Innes.
The value of January futures for Brent crude oil on London’s ICE Futures exchange is $96.19 a barrel by 7:15 PM on Monday, up $0.2 (0.21%) from the previous session’s closing price. Those contracts rose $2.32 (2.5%) to $95.99 a barrel at the close of trading on Friday.
The price of WTI futures for December at electronic trades of NYMEX grew by that time by $0.14 (0.16%) to $89.1 per barrel. By closing of previous trades the cost of those contracts grew by $2.49 (2.9%) to $88.96 per barrel.
Brent had fallen by 2.6% and WTI by 3.9% at the end of previous week.
The increase in oil consumption in China may coincide with a reduction in supply in the market in connection with the forthcoming entry into force of the European embargo on imports of Russian oil and reduce OPEC production +, notes Bloomberg.
U.S. Treasury Secretary Janet Yellen said over the weekend that a European embargo on oil purchases from Russia that enters into force Dec. 5 will “very likely” force Moscow to sell some oil at a price no higher than the ceiling set by the United States and its allies, if Russia wants to avoid a significant reduction in oil exports.
