Oil prices extended their gains by as much as $1 in the previous session on data showing fuel stockpiles slumped in the US after the winter storm at the end of the year, bolstered by hopes for increased demand in China.
Brent crude futures rose 75 cents, or 1%, to $79.44 a barrel at 0645 GMT after closing at $78.69, up 85 cents on Thursday.
West Texas Intermediate (WTI) crude futures were up 74 cents, or 1%, at $74.41 a barrel. They had settled 83 cents higher at $73.67 in the previous session.
China’s reopening optimism, particularly the additional stimulus measures to stimulate the real estate sector, is the main bullish factor for oil prices, as the demand outlook improves. The softening US dollar also gave an upward momentum to the oil markets.
China on Thursday announced more government support measures to support the highly indebted real estate sector, which accounts for a quarter of the country’s economy, including creating a dynamic regulatory mechanism on mortgage rates for first-time home buyers.
Total passenger journeys by road, rail, water, and air during the upcoming Lunar New Year are expected to reach 2.1 billion this year, more than double the 1.05 billion from the same period last year, transportation officials said on Friday.
Daily passenger flights scheduled for the holiday season, which began on Saturday, accounted for an average of 73% of pre-pandemic levels in 2019.
China, the world’s largest importer of crude oil, has brought an increase in COVID infections across the country as it put an end to its strict zero-COVID policy.
Data from the US Energy Information Administration (EIA) on Thursday showed that distillate stocks, including diesel and heating oil, fell more than expected during the week of December 30. Compared to the expectations for a decrease of 396,000 barrels, it fell by 1.4 million barrels.
Meanwhile, US gasoline inventories fell by 346,000 barrels last week, compared to analysts’ expectations for a decline of 486,000 barrels, according to EIA data.
On a weekly basis, however, oil prices are on their way to ending both Brent and WTI contracts down nearly 7% from the previous week.
Concerns over the possibility of a global recession are weighing on the trading sentiment. Oil is trying to recover, but demand concerns keep gains limited.
The Saudis are lowering prices as the short-term crude oil demand outlook looks unlikely to receive a major boost from a strong Chinese reopening.
Saudi Arabia, the world’s largest exporter of crude oil, has slashed the prices of its flagship Arabian light crude oil, which it sells to Asia, to the lowest level since November 2021 amid global pressures hitting oil.
