Oil prices inch higher on China demand optimism

Oil prices edged higher on Wednesday on hopes of a recovery in fuel demand as China continues to ease its COVID-19 restrictions, though gains were capped by recession concerns and restarts at some US energy plants shut by winter storms, Reuters reported.

Brent futures for February delivery rose 9 cents, or 0.1%, to $84.42 a barrel, by 0406 GMT. US crude advanced 10 cents, or 0.1%, to $79.63 per barrel.

Amid the optimistic market mood, both benchmarks hit their highest level in three weeks on Tuesday.

The hopes for a boost to demand for fuel in top crude oil importer China come as the world’s second-biggest economy moves towards reopening its borders next month after three years of stringent curbs on movement and businesses to counter the spread of COVID.

Chinese hospitals were under intense pressure due to a surge in COVID-19 infections as the country moves towards treating the virus as endemic.

The most recent COVID-19 policy easing in China will have a short-term positive effect specifically on international aviation, said Claudio Galimberti, senior vice-president at Rystad Energy.

Prices were also buoyed by news that Russia aims to ban oil sales from Feb. 1 to countries that abide by a G7 price cap imposed on Dec.