After falling more than $2 a barrel in the previous session, oil prices recovered on Monday as concerns about a global recession were outweighed by optimism from China’s reopening and oil demand recovery.
By 0103 GMT, Brent crude futures had increased by 72 cents, or 0.9%, to $79.76 per barrel, while US West Texas Intermediate crude had increased by 60 cents, or 0.8 percent, to $74.89 per barrel.
After Beijing eased restrictions on mobility, China, the second-largest oil consumer and world’s largest crude oil importer, is experiencing the first of three anticipated waves of Covid-19 cases.
Tina Teng, an analyst with CMC Markets, stated, “The reopening optimism and accommodative policy improve oil’s demand outlook, despite a surge in Covid cases.”
Caixin, a Chinese news outlet, reported on Friday that China intends to increase flights with the intention of returning the country’s average daily passenger flight volumes to 70 percent of what they were in 2019 by January 6.
Refineries scrambled to use up their 2022 export quotas and sell down rising inventory, resulting in China’s diesel and gasoline exports continuing to surge to their highest level in over a year in November.
Last week, a Canada-to-US pipeline that was operated by TC Energy Corp. and was focused on cleaning up an oil spill caused Brent and WTI to rise by more than 3 percentage points. Prices for US heavy crude grades have been supported by the pipeline’s closure, which had the capacity to deliver 622,000 barrels of Canadian crude per day to US refiners.
The prospect of higher prices was also bolstered by the US Energy Department’s announcement on Friday that it will begin repurchasing crude oil for the Strategic Petroleum Reserve.
Since the record-breaking 180 million barrel release from the stockpile this year, this will be the first purchase made by the United States.