Oil rose weekly to its highest level in almost two months as China eased virus restrictions, Washington considered suspending sales from strategic reserves, and a weaker dollar boosted the attractiveness of commodities.
West Texas Intermediate was above $81 a barrel after a four-day rise. The rise in prices comes ahead of a weekend meeting of the Organization of the Petroleum Exporting Countries and its allies, as well as a push by the European Union to agree on a price ceiling for Russian oil.
Beijing, the largest oil importer, said it would allow some people to self-isolate at home as part of the Covid Zero policy easing. Also, the head of the People’s Bank of China, Yi Gang, said that the central bank is focused on economic growth, contributing to the prospects for energy consumption.
Oil rebounded this week after hitting its lowest level since 2021 on Monday, with demand improving as China eased Covid-Zero policies following protests. In addition, Federal Reserve officials are expected to slow down the pace of interest rate hikes as the US consumer price indicator came in below estimates.
China is moving towards reopening faster than expected after the riots. If China starts working next year, it will really make a difference.
In addition, the outlook was better amid calls from the Biden administration to end sales from the Strategic Petroleum Reserve and allow the country to replenish the country’s reserves in case of an emergency.
The OPEC+ group will meet this weekend to decide on supplies. It is also expected that OPEC+ countries will maintain their previous production. Traders are also keeping an eye on the news and details on the cap on Russian offshore oil prices, with the EU approaching a $60-per-barrel upper limit ahead of Monday’s deadline.
The price cap of $60 per barrel remains above the current levels that Russia receives for its oil. If an agreement is reached at this level, it will have little effect on Russia’s oil revenues for now.
Shipping costs for Russian oil are skyrocketing as more tanker owners pull out of the trade. Shippers who are still willing to ship Russian oil are trying to charge higher risk fees.
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