Rise in oil prices amid optimism about recovery of demand in China

Oil prices regained ground on Monday, after falling more than $2 a barrel in the previous session, amid optimism that China would lift COVID-19 restrictions and recover oil demand, which outweighed fears of a global recession.

Brent crude futures rose 72 cents, or 0.9 percent, to $79.76 a barrel by 0103 GMT, while US West Texas Intermediate crude was $74.89 a barrel, up 60 cents, or 0.8 percent.

China, the world’s largest crude oil importer and second oil consumer, is seeing the first of three expected waves of COVID-19 cases after Beijing eased movement restrictions.

On Friday, Chinese business news outlet Caixin reported that China plans to increase flights with the aim of restoring the country’s average daily passenger flight volume to 70 percent of 2019 levels by January 6.

China’s exports of diesel and gasoline continued to rise in November, reaching their highest level in more than a year, as refiners scrambled to use up their 2022 export quotas and sell growing inventories.

Brent and West Texas Intermediate rose more than 3 percent last week as a pipeline from Canada to the United States remained closed as operator TC Energy focused on clearing an oil spill. The closure of the pipeline, which transports 622 thousand barrels per day of Canadian crude to US refineries, supported the prices of heavy US crude grades.

Friday’s announcement by the US Department of Energy that it will start buying back crude oil, in order to boost the Strategic Petroleum Reserve, also fueled expectations of higher prices.

This will be the US’s first purchase since the release of a record 180 million barrels of storage this year.