Oil advanced as Chinese officials debate easing some COVID rules, a policy that has weighed on its economy and energy demand.
Brent rose much as 1.6 per cent to trade above US$93 a barrel, adding to Wednesday's gain. China's bureaucrats are debating whether to reduce the amount of time people coming into the country must spend in mandatory quarantine, according to people familiar with the talks.
China's COVID Zero strategy, which relies on mass testing and lockdowns to stamp out infections, has added to bearish factors weighing on global crude demand this year. The shift in policy would need to be approved by senior leaders, so could still be altered or not deployed at all, said one person. Crude has seen choppy trading this month, with the market caught between worries about a global economic slowdown and supply curbs from the Organization of Petroleum Exporting Countries and its allies. The US has released oil from its emergency reserves to cool prices, while also saying that it will refill that supply if prices are at or below US$67 to US$72 per barrel, potentially setting a floor for prices.
China debating easing COVID restrictions “is of course huge for oil if it happens,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “With the US being ready to pick up oil at US$67-72 a barrel there isn't all that much downside. Add OPEC+ ready to cut whenever it turns out to be necessary. It limits downside price risk considerably.”The November contract, which expires Thursday, rose 1.6 per cent to US$86.91 a barrel.
There are still questions about China's demand outlook, with the nation's oil buying muted in the latest trading cycle, even after refiners were allocated new quotas to export oil products. Infections have also swelled in Beijing to the highest in four months, stoking concerns about potential curbs as the flareup worsens in the middle of the twice-a-decade party congress.
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