With hopes of a fuel demand recovery stoked by China’s most recent relaxation of COVID-19 restrictions, oil reached a three-week high on Tuesday. Winter storm-related cuts to U.S. energy production also helped to support the price.
According to the National Health Commission, China will stop requiring inbound travelers to be quarantined as of January 8. This is a significant step toward reducing border restrictions, which have largely been in place since 2020.
Brent crude oil was up 47 cents, or 0.6%, to $84.39 per barrel. Meanwhile, WTI crude in the US was up 41 cents, or 0.5%, to $79.97. Earlier in the session, both benchmarks reached their highest levels since December 5.
The markets in the UK and the US were closed on Monday for the Christmas holiday.
Equities increased in response to the Chinese action. Meanwhile, the U.S. dollar decreased on Tuesday. For owners of other currencies, a falling dollar lowers oil prices while generally increasing the value of risky assets.
According to Kazuhiko Saito, the head analyst at Fujitomi Securities, worries about supply disruptions brought on by winter storms in the United States have also benefited oil.
Turkish Stocks and Oil
It’s not surprising that funds that track the energy sector outperformed Wall Street this year given the sharp increase in oil stocks in 2022. However, the top fund of the year is a surprise: it invests in various Turkish companies.
The iShares MSCI Turkey exchange-traded fund had more than doubled as of December 19, per Morningstar Direct data. The fund has significant holdings in Turkish financial behemoth Akbank, Istanbul-based retailer Bim, and Turkish Airlines’ parent company.
Like the rest of the world, Turkey has been hard hit by inflation, and its currency, the lira, has plummeted against the U.S. dollar and other major global currencies.
Turkish stock market has soared because it is doing something that very few other countries are: Its central bank has been lowering interest rates to boost consumer spending. Turkey’s president, Recep Tayyip Erdogan, wants to keep interest rates as low as possible. Vladimir Putin’s decision to invade Ukraine in late February prompted most funds with holdings in significant Russian corporations to either sell their holdings or cease trading, effectively pressuring Washington, Europe, and the rest of the Western world to sever their ties with Moscow and Russian businesses.
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