Mon, January 30, 2023

The End of COVID Restrictions in Sight, The Oil Surges 2%

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On Friday, oil prices increased by more than 2%. Meantime, China, the world’s largest crude importer, relaxed some of its strict COVID restrictions.

By 07:45 GMT, Brent oil futures had risen $2.39, or 2.6%, to $96.06 per barrel. It continued a prior session increase of 1.1%. After rising by 0.8% the previous session, U.S. WTI crude futures increased by $2.24, or 2.6%, to $88.71 a barrel. There isn’t a penalty for airlines bringing in sick passengers anymore, and quarantine periods for people close to cases and those arriving from outside are now two days.

What Do Experts Think?

SPI Asset Management’s managing partner, Stephen Innes, said oil dealers praise the news. The key for the oil markets is to keep an eye on developments for this and other little improvements to the government’s zero-COVID policy. Given that lockdowns harm mobility and oil prices more than economic activity, the effort to liberalize the COVID-zero policy will serve as a springboard for oil markets, he claimed.

Prices increased on Friday. Softer-than-expected U.S. inflation statistics increased the likelihood of a gentle landing for the largest economy in the world. The statistics reinforced optimism that the Fed would scale back rate rises. A falling dollar also helped oil prices since foreign currency holders may purchase the commodity at a lower price. However, swelling U.S. oil stocks and continuing concerns about China’s restricted fuel consumption in the wake of an increase in daily COVID cases were causing the benchmark oil futures to be heading for weekly drops of more than 1%. Since the lockdown in Shanghai earlier this year, China’s COVID-19 caseload has increased to its greatest level. Beijing and Zhengzhou had recorded daily cases.

Travel across China remained slow because individuals sought to avoid the possibility of being placed in quarantine, in addition to work-from-home restrictions lowering mobility and fuel demand, according to ANZ Research analysts in a note.

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