Oil rises on Monday as the prospect of demand recovery. This is led by China’s loosening of the COVID-19 curb. Moreover, it is due to the United States’ decision to buy back oil for its state reserves. They gained the upper hand over global recession fears.
Brent crude futures LCOc1 gained 74 cents, or 0.9%, to $79.78 a barrel by 0458 GMT while U.S. West Texas Intermediate crude CLc1 was at $75.03 a barrel, up 74 cents, or 1%.
Both benchmarks plunged more than $2 a barrel last Friday. Following hawkish remarks from U.S. and European central banks on interest rates hike that sparked worries of a possible recession.
China, the world’s top crude oil importer, and No. 2 oil consumer is experiencing its first of three expected waves of COVID-19 cases after Beijing relaxed mobility restrictions.
“The reopening optimism and accommodative policy improve oil’s demand outlook,” CMC Markets analyst Tina Teng said.
China’s abrupt end to its ‘dynamic zero’ COVID policy is breathing new life. This is into its ailing aviation sector, with average jet fuel demand jumping by 75%. Moreover nearly 170,000 barrels per day, in two weeks, according to satellite data firm Kayrros.
On Friday, news outlet Caixin reported that China plans to increase flights with the goal to restore the country’s average daily passenger flight volumes to 70% of 2019 levels by Jan. 6.
“The market will focus on the progress of demand resumption in China…the general outlook is positive but the path of recovery could be slow and bumpy given the severe COVID situation in the near term,” analysts from Haitong Futures said.
China also pledged to focus on stabilizing its $17-trillion economy in 2023 and step up policy adjustments to ensure key targets are hit, said its top leaders and policymakers at a closed-door two-day meeting for charting the economy’s course next year.
Source: Oil & gas 360
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