Moving liberalization of COVID-zero policy will be a springboard for oil markets
Oil rose more than 2% on Friday after the government of China, the world’s largest crude importer, eased some of the country’s heavy COVID restrictions.
Brent futures rose $2. 39, or 2. 6%, to $96. 06 a barrel at 07:45 GMT, extending 1. 1% in the last session.
U. S. West Texas Intermediate (WTI) crude futuresThe U. S. gained $2. 24, or 2. 6%, to $88. 71 a barrel, after 0. 8% the previous session.
The easing of restrictions comes with reducing quarantine periods to two days for close contacts of cases and incoming travelers, as well as removing a fine for airlines for bringing angry passengers.
“Oil investors applaud the news. The key for oil markets is to continue to closely monitor progress on this and other marginal adjustments in the government’s COVID stance 0,” said Stephen Innes, managing partner at SPI Asset Management.
The move toward liberalizing the zero-COVID policy will be a springboard for oil markets, as lockdowns hurt mobility and oil more than economic activity, he said.
Prices also rose on Friday after U. S. inflation data boosted the U. S. More comfortable than expected U. S. shares boosted hopes that the Federal Reserve would slow rate hikes, extending a comfortable landing for the world’s largest economy.
A weaker U. S. dollar has also supported oil prices as it makes the product less expensive for buyers holding other currencies.
Still, benchmark oil contracts were headed for weekly declines of more than 1% due to emerging U. S. oil inventories. Lingering fears about limited fuel demand in China amid a surge in COVID cases.
The number of COVID-19 cases in China has reached its highest point since Shanghai’s lockdown earlier this year. Beijing and Zhengzhou have reported record cases.
In addition to work-from-home orders that reduced mobility and fuel demand, China remained subdued as others sought to avoid the threat of quarantine, analysts at ANZ Research said in a note. (Reporting through Sonali Paul in Melbourne and Jeslyn Lerh in Singapore; Edited by Bradley Perrett, Simon Cameron-Moore, Tom Hogue and Gerry Doyle)
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