LONDON: Oil prices edged lower on Monday on demand concerns linked to China’s stringent COVID containment policy but remained close to $100 a barrel on support from a weaker dollar and recovering Chinese crude imports.

Brent crude futures fell by 39 cents, or 0.4% to $98.18 a barrel by 1306 GMT. U.S. West Texas Intermediate crude fell by 47 cents, or 0.51%, to $92.14.

Both contracts dropped by more than $1 a barrel earlier in the session after Chinese health officials at the weekend reiterated their commitment to strict COVID containment measures, dashing hopes of a rebound in oil demand from the world’s top crude importer.

Brent and WTI rose last week, climbing 2.9% and 5.4%, respectively on speculation about a possible end to COVID-19 lockdowns despite the lack of any announced changes.

However, prices pared gains on stronger risk sentiment, news of recovering Chinese crude imports and the U.S. dollar weakening against against other currencies, UBS analyst Giovanni Staunovo said.

Both contracts remain well above $90 a barrel, with Brent hovering nearer $100.

Oil climbs 4% as dollar slips and EU ban looms

The U.S. dollar sank against the euro on Monday and sterling was supported by risk-on sentiment and a rally in European stock markets.

While China’s imports and exports contracted unexpectedly in October, its crude oil imports rebounded to the highest level since May.

Oil prices have also been underpinned by expectations of tighter supplies when the European Union’s embargo on Russia’s seaborne crude exports starts on Dec. 5, even though refineries worldwide are ramping up output.

U.S. oil refiners this quarter will run their plants at breakneck rates, near or above 90% of capacity. China’s largest private refiner Zhejiang Petroleum and Chemical Co (ZPC), meanwhile, is raising diesel output.

Kuwait Integrated Petroleum Industries Co (KIPIC) said on Sunday that the first phase of its Al Zour refinery has started commercial operations, the KUNA state news agency reported.