Oil rose on Tuesday in hopes that China will loosen COVID-19 controls after rare protests in major Chinese cities over the weekend against the country’s zero-COVID-19 strategy.
Brent crude futures were up $1.4, or 1.7%, to trade at $84.57 a barrel at 0645 GMT. West Texas Intermediate (WTI) crude futures rose $1.17, or 1.5%, to $78.39 a barrel.
Both benchmarks earned more than $2 earlier in the day.
Amid record COVID infections and protests in Shanghai and Beijing, China held a press conference on COVID prevention and control measures at 3 pm local time.
Asian shares also rallied as unsubstantiated rumors swirled that the unrest in China might prompt a loosening of the COVID restrictions. Similar rumors have caused the markets to fluctuate in recent weeks.
Beijing has adhered to the zero-COVID policy even as much of the world has lifted most of the restrictions. The weekend witnessed rare street protests in cities across China, as a vote against President Xi Jinping’s zero-COVID policy, and the strongest public challenge in his political career.
Oil prices are also supported by the expectation that leading oil producers will make changes to their production plans at the next meeting.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will hold a meeting on December 4. The weakening demand in China will lead OPEC+ to what to do. The meeting will reflect OPEC+’s short-term market sentiment and will likely be a turning point for oil prices.
OPEC+ began lowering its production target by 2 million barrels per day (bpd) in November to support oil prices.
Markets are also assessing the impact and global repercussions of an approaching price cap in the West on Russian oil.
G7 Group and European Union diplomats are discussing a cap of between $65 and $70 a barrel to limit the oil revenue that finances Moscow’s military offensive in Ukraine without hurting global oil markets.
But diplomats said EU governments were unable to agree on the upper limit on Monday, as Poland insisted the upper limit should be kept lower than recommended by the G7.
The price ceiling will go into effect on December 5, when the EU ban on Russian crude also comes into effect.
