LONDON: Oil prices jumped by more than 3% on Friday after health authorities in China eased some of the country’s heavy COVID curbs, raising hopes for improved economic activity and demand in the world’s top crude importer.
Brent crude futures rose $2.89, or 3.1%, to $96.56 a barrel by 1432 GMT, extending a 1.1% rise from the previous session.
U.S. West Texas Intermediate (WTI) crude futures gained $3.24, or 3.8%, to $89.71 a barrel, after climbing 0.8% in the previous session.
The easing curbs include shortening quarantine times for close contacts of cases and inbound travellers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers.
“The first small steps towards easing of the regulations that were announced by the Chinese government this morning allowed oil prices to climb again, even though this by no means constitutes a departure from the country’s strict zero-Covid policy, in our opinion,” Commerzbank said.
Prices also picked up on Friday after milder-than-expected U.S. inflation reinforced hopes that the Federal Reserve would slow down rate increases, boosting chances of a soft landing for the world’s biggest economy.
Oil drops for fourth day on China demand concerns
A weaker U.S. dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said OPEC+ will remain cautious on oil production, noting that members saw “uncertainties” in the global economy ahead of the bloc’s next meeting in December, Bloomberg News reported on Friday.
The Organization of the Petroleum Exporting Countries and allies led by Russia, collectively known as OPEC+, last month agreed steep production cuts, and will meet again on Dec. 4 to set its policy.
Still, the benchmark oil contracts were headed for weekly declines due to rising U.S. oil inventories, and lingering fears over capped fuel demand in China amid an uptick in daily COVID cases.
China’s COVID-19 case load soared to its highest since the lockdown in Shanghai earlier this year. Both Beijing and Zhengzhou reported record daily cases.
Besides work-from-home orders reducing mobility and fuel demand, travel across China remained subdued as people wanted to avoid the risk of being caught up in quarantine, ANZ Research analysts said in a note.
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