Oil prices rose on Tuesday, due to a demand recovery in China, as the world’s second-largest economy eases severe COVID-19 restrictions. As well as skepticism that OPEC+ countries’ higher output target will alleviate tight supplies.
Brent crude futures were up 28 cents, or 0.2%, at $119.79 barrel at 0601 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.3%, at $118.81 a barrel. The benchmark hit a three-month high of $120.99 on Monday. After two months of lockdowns to contain breakouts of the Omicron strain, Beijing and Shanghai have been resuming normalcy. Traffic bans were lifted and restaurants were opened for dine-in service on Monday in most parts of Beijing.
With automobiles back in China’s major cities we could see a jump in fuel demand,”- CMC Markets. OPEC and allies decided to boost output for July and August by 648,000 barrels per day, or 50%. The increased target was spread across all OPEC+ members. However, many members have little room to ramp up output, including Russia, which faces Western sanctions.
While the new increased monthly targets continue to be driven by proportional contributions from all participants (including Russia). It is unrealistic to expect an increase close to the headline figure,” said Stephen Innes, managing partner at SPI Asset Management, in a note. Elsewhere, U.S. crude inventories likely fell last week, while gasoline and distillate stockpiles were seen up, a preliminary Reuters poll showed on Monday.
-Reuters.
