NEW YORK – 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, 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, 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 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.
The European Union and Group of Seven (G7) coalition will cap prices of Russian refined products from Feb. 5, in addition to the price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.
The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to provide time to assess the impact of the oil products price cap.
In India, crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up discounted Russian fuel amid a steady increase in consumption in the country.