🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Crude oil higher on optimism over relaxation of China's curbs

Published 11/29/2022, 09:10 AM
Updated 11/29/2022, 09:11 AM
© Reuters.

By Peter Nurse   

Investing.com -- Oil prices rose Tuesday, rebounding from the year’s lows on optimism that civil unrest in China will lead to the relaxing of the country’s tight mobility restrictions, potentially boosting economic activity at the world’s largest importer of crude.

By 09:10 ET (14:10 GMT), U.S. crude futures traded 1.5% higher at $78.43 a barrel, while the Brent contract rose 1.9% to $85.45.

China reported on Monday its first drop in the number of daily infections in more than a week. Additionally, the country’s National Health Commission said it will accelerate vaccination of the over 80s, a vulnerable age bracket in which over one-third is still unprotected.

Such a move has raised optimism that this could be the first step in easing back the unpopular "zero-COVID" curbs which prompted demonstrations in many cities over the weekend.

Helping the tone Tuesday was the latest inflation data out of Europe, with numbers out of Germany and Spain both falling short of expectations, suggesting the Eurozone was moving closer to peak inflation.

This could mean that the European Central Bank ends its rate-hiking cycle earlier than predicted, helping the region avoid a deep recession and a severe reduction in energy demand.

Later in the session, the American Petroleum Institute is scheduled to release its weekly inventory data, which could cast light on the strength of demand during the holiday weekend. Analysts expect the U.S. government inventory data to show a drop of around 2.5 million barrels in crude stockpiles.

An additional boost to the market Tuesday was speculation that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will cut production in order to boost prices, when it meets on Sunday.

The group agreed back in October to reduce their production targets by 2M barrels a day from November, which briefly drove crude prices close to $100 a barrel. 

However, concerns over weakening demand, particularly from China, resulted in prices falling to an 11-month low in recent sessions, below the levels seen in October when OPEC+ cut production levels.

“OPEC+ will seriously consider a new production cut at its upcoming meeting, particularly if crude prices fall much below their current level in the next week,” Eurasia Group said.

“Ultimately, the decision will depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of the EU sanctions,” it added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.