Oil Prices Hit 7-Week High on Stronger China Outlook

Oil prices rose by around 1per cent on Monday to a seven-week high, extending last week’s gains on the back of a stronger outlook thanks to an expected economic recovery in top oil importer China this year.

Brent crude was up US$1.28, or 1.5per cent, at US$88.91 a barrel at 11:06 a.m. EST (1606 GMT). The session high was US$88.99 a barrel, the highest since Dec. 1.

U.S. West Texas Intermediate (WTI) crude rose 76 cents, or 0.9per cent, to US$82.40. The session high was US$82.64 a barrel, the highest since Dec. 5.

Last week Brent rose 2.8per cent while the U.S. benchmark logged a 1.8per cent gain.

Asian trading was slower because of the Lunar New Year holiday, but analysts said that optimism over China’s reopening is likely to drive oil prices higher.

Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta, said the market wants to preserve long positions in case Chinese growth resumes.

Data shows a solid pick-up in travel in China after COVID-19 curbs were eased, ANZ commodity analysts said in a note, pointing out that road traffic congestion in the country’s 15 key cities so far this month is up 22per cent from the same period last year.

Crude Oil Prices

Crude oil prices in much of the world’s physical markets have started the year with a rally as China has shown signs of more buying and traders have worried that sanctions on Russia could tighten supply.

“While the (China) reopening itself will no doubt prove to be complicated, particularly over the holiday season, early indications suggest there has been a rise in activity, meaning the economy could perform better,” said OANDA analyst Craig Erlam.

Brent is expected to move back into a range between US$90 and US$100 as the oil market tightens, Erlam said.

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Source: Oil & Gas 360

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