Oil hits 3-week high due to easing Covid restrictions in China

Oil hit a three-week high on Tuesday, after the latest easing of COVID-19 restrictions in China spurred hopes of a recovery in fuel demand and additional support from a cut in energy production in the United States due to winter storms.

According to “Reuters”, the National Health Committee said on Monday that China will exempt those coming to it from quarantine procedures, starting from the eighth of January, in a major step towards easing restrictions on the borders closed to a large extent since 2020.

Brent crude rose 22 cents, or 0.3 percent, to $84.14 a barrel by 0911 GMT, while US West Texas Intermediate crude rose seven cents to $79.63 a barrel. And the two benchmarks recorded earlier in the session their highest levels since December 5

“This is definitely something that traders and investors have been looking forward to,” said Naeem Islam, an analyst at AvaTrade, referring to China’s quarantine plan.

The British and American markets were closed on Monday for the Christmas holidays

Kazuhiko Saito, chief analyst at Fujitomi Securities, said that oil also drew support from fears of supply disruption due to winter storms in the United States.

He added, “However, the weather is expected to improve in the United States this week, which means that the wave of rise may not last for long.”

As of Friday, about 1.5 million barrels of daily production capacity had been closed to refineries on the US Gulf Coast, while oil and gas production from the states of North Dakota to Texas suffered due to the freeze, which reduced production.