Crude Oil
Crude Oil Appreciates on Friday as Chinese Government Eases COVID-19 Restrictions
Oil gained 3% on Friday following reports that China, the world’s largest importer of the commodity, is cutting down on its COVID-19 measures.
Global oil prices extended gains on Friday after China announced it was easing part of COVID-19 restrictions.
Brent crude oil, the international benchmark for Nigerian oil, appreciated by 3.1% to $96.53 a barrel at 1 pm Nigerian on Friday.
U.S. West Texas Intermediate (WTI) crude gained 3.3% to $89.34 a barrel, after climbing 0.8% in the previous session.
The easing curbs include shortening quarantine times for close contacts of cases and inbound travellers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers.
“The first small steps towards easing of the regulations that were announced by the Chinese government this morning allowed oil prices to climb again, even though this by no means constitutes a departure from the country’s strict zero-Covid policy, in our opinion,” Commerzbank said.
Prices also picked up on Friday after milder-than-expected U.S. inflation data reinforced hopes that the Federal Reserve would slow down rate increases, boosting chances of a soft landing for the world’s biggest economy.
A weaker U.S. dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies.
Still, the benchmark oil contracts were headed for weekly declines due to rising U.S. oil inventories, and lingering fears over capped fuel demand in China amid an uptick in daily COVID cases.
China’s COVID-19 case load soared to its highest since the lockdown in Shanghai earlier this year. Both Beijing and Zhengzhou reported record daily cases.
Besides work-from-home orders reducing mobility and fuel demand, travel across China remained subdued as people wanted to avoid the risk of being caught up in quarantine, ANZ Research analysts said in a note.