Ana sayfa » Oil prices soar on news of easing in China COVID quarantine measures

Oil prices soar on news of easing in China COVID quarantine measures

US oil reserve release is too small to impact the market

by BUNKERIST

Oil prices gained about $1 on Thursday amid rising investor sentiment amid reports that China is considering reducing the quarantine period for incoming visitors.

Brent crude futures for the December settlement rose 80 cents, or 0.9%, to $93.21 a barrel as of 0610 GMT.

West Texas Intermediate (WTI) crude for November delivery (WTI), which ends Thursday, rose $1.29, or 1.5%, to $86.84 a barrel. The December WTI contract was last up 1.4%, or 1.16 cents, at $85.68 a barrel.

Brent and WTI contracts rallied around $1.

China, the world’s largest importer of crude oil, has this year adhered to tight COVID-19 restrictions and weighed heavily on commercial and economic activities that have slashed fuel demand.

The light seen at the end of the tunnel of China’s zero Covid policy reflected positively on the market and prices are up with news of possible quarantine relaxation.

On Thursday, it was reported that China is considering reducing the quarantine period for incoming visitors from 10 days to seven days.

It was stated that authorities are aiming to reduce the quarantine period to two days at a hotel and then to five days at home, but it is not yet clear how the new restrictions will apply to foreigners and other visitors not residing in China.

However, while the bullish outlook for oil persists, the market is being warned that China will stick to the zero Covid policy next year, at least until the first quarter.

Oil prices were supported by the European Union’s impending ban on Russian crude oil and petroleum products, as well as production cuts from other producers, including the Organization of the Petroleum Exporting Countries and Russia.

OPEC+ agreed on a production cut of 2 million barrels per day in early October. But analysts are already taking into account a drop in actual production of around 1 million bpd due to underproduction in countries like Iran, Venezuela, and Nigeria.

As a separate move, the U.S. announced plans to begin replenishing stocks as it tries to curb high gasoline prices by selling the remaining 15 million barrels of oil by the end of the year, which the country plans to exit from its emergency oil reserves.

However, there are comments that this behavior is insufficient to affect the market and that this will increase the global oil supply by only 0.04 million barrels per day.

Other than the unexpected resurgence of shale oil, there are a few more permanent policy measures are thought that the Biden administration can use to effectively bring oil down.

EU sanctions on Russian oil imports will likely be the focus of the oil market in the coming weeks. Brent oil futures are expected to average around $100 per barrel in Q4 2022 due to supply disruption caused by EU sanctions.

Meanwhile, global fuel demand remains uncertain. The Federal Reserve said on Wednesday in a report that companies are more pessimistic about the outlook, U.S. economic activity has risen modestly in recent weeks, although it has held steady in some regions and dropped in a few.