Oil futures reversed losses on Friday thanks to a weaker U.S. dollar. Nonetheless, the world’s biggest importer’s imminent release of crude reserves capped price gains.
Brent crude futures gained 32 cents or 0.4% to $84.79 a barrel at 07:30 GMT. U.S. West Texas Intermediate (WTI) crude advanced 11 cents or 0.1% to $82.23 a barrel.
Oil prices turned positive as the greenback heads for its largest weekly fall in more than a year. A weaker U.S. currency makes commodities more affordable for holders of other currencies.
Still, gains were limited after a media outlet reported that China plans to release oil reserves around the Lunar New Year holidays. It will release oil as part of a plan coordinated by the United States. Major consumers want to reduce global prices.
One source familiar with the topic stated that China agreed to release a relatively bigger amount of oil is above $85 a barrel. But the country will release a smaller volume if oil stays near the $75 level.
The country also posted in 2021 its first annual decline in crude oil shipments in two decades. Traders expect imports to recover in 2022.
Besides, there were concerns about fuel demand in China as the omicron variant spread to the city of Dalian. The world’s biggest oil importer is trying to deal with the pandemic. The country suspended more international flights and stepped up efforts to rein in a virus outbreak at Tianjin.
Oil and geopolitics
Despite challenges, Brent and WTI prices are set to climb for a fourth week in a row, supported by supply and geopolitical concerns in Libya and Kazakhstan and a drop in U.S. crude inventories to 2018 lows.
Nevertheless, with oil prices above $80, there is growing political pressure for the White House to lobby OPEC+ to reach their production quotas.