Crude oil prices extended gains on Thursday following the report that China, the world’s largest importer of crude oil is considering a cut in its quarantine duration for inbound visitors.
Brent crude oil, against which Nigerian oil price is measured, rose to $93.71 a barrel at 10:39 am Nigerian time, up from $89.34 it traded on Wednesday.
The U.S. West Texas Intermediate (WTI) crude oil, appreciated from $81.60 per barrel it traded on Wednesday to $85.76 a barrel.
“The market is bouncing on that quarantine news and by extension a flickering light at the end of the zero-Covid policy tunnel,” said Stephen Innes, managing partner at SPI Asset Management, adding that this is “the first positive sign we have seen out of China on the Covid front.”
Earlier this year, China instituted broad-based COVID-19 measures in key cities to contain the spread of the virus and avert the 2020 type of lockdown. This weighed heavily on business and economic activity and plunged demand for crude oil.
On Thursday, Bloomberg reported that China is considering easing some of the measures for inbound visitors. Quoting people familiar with the matter, the report said the quarantine period for inbound visitors would be eased from the current 10 days to 7 days.
According to the report, Chinese officials are planning to cut the quarantine period to two days in a hotel and then five days at home, but there is no clarity yet on how the new restrictions would apply to foreigners and other visitors without a residence in China.
However, Innes has warned that China’s zero-Covid policy is likely to remain in place, at least through the first quarter of 2023. Therefore, maintains a bullish his bullish view on oil going into the new year.
“Short of an unlikely shale oil revival, there are few lasting policy measures the Biden administration can use to effective push oil much lower.”