On Tuesday, oil reached a three-week high as China’s most recent relaxation of COVID-19 limits stoked expectations of a rebound in fuel consumption. Winter storm-related reductions in U.S. energy production also helped to maintain the price of oil.
The National Health Commission announced on Monday that China will stop requiring visitors to enter quarantine beginning on January 8. This is a significant step toward lifting restrictions on borders that have been largely closed since 2020.
By 0911 GMT, Brent crude had increased by 22 cents, or 0.3%, to $84.14 per barrel, while U.S. West Texas Intermediate crude had risen by 7 cents to $79.63.
Earlier in the day, both benchmarks reached their highest levels since December 5.
China’s strategy regarding the quarantine rule was welcomed by traders and investors, according to Avatrade analyst Naeem Aslam.
Due to the Christmas holiday, the U.K. and U.S. markets were closed on Monday.
In response to the Chinese move on Tuesday, stocks rose and the U.S. currency declined. Oil becomes more affordable for holders of foreign currencies as well as supporting risky assets when the dollar is lower.
Concerns over supply disruption brought on by winter storms in the United States also helped oil, according to Kazuhiko Saito, a chief analyst at Fujitomi Securities.
However, he added, “the U.S. weather is anticipated to improve this week, so the rise may not last too long.”
Around 1.5 million barrels of daily refining capacity along the Gulf Coast of the United States had been shut down as of Friday, and supply was reduced due to freeze-ins that affected oil and gas production from North Dakota to Texas.
Price support also came from worries about a potential Russian production decrease.
In response to price limitations, Russia may reduce oil production by 5% to 7% in the first quarter of 2023, according to Deputy Prime Minister Alexander Novak, quoted by the RIA news agency on Friday.
