Brent crude was up 52 cents, or 0.6%, at $84.44 a barrel, while U.S. West Texas Intermediate crude was at $80.04 a barrel, up 48 cents, or 0.6%. Both Brent and WTI hit their highest levels since December 5, earlier in the session. The two oils recorded their biggest weekly gains since October on Friday, with Brent rising 3.6% and WTI gaining 2.7%.
The end of quarantine requirements for inbound travelers in China, set to take effect on January 8, has raised optimism for higher demand from the top crude oil importer.
"Oil demand recovery is in sight for China, which is great news for the refining sector,"
said Serena Huang, head of APAC analysis at Vortex. The announcement also weakened the dollar, making oil cheaper for holders of other currencies.
Oil Price Support from US Winter Storms and Positive Demand Outlook from China
In addition to the positive demand outlook from China, oil prices are also being supported by concerns over supply disruption due to winter storms in the United States. Kazuhiko Saito, a chief analyst at Fujitomi Securities Co Ltd, noted that the concerns "prompted buying, though trade was thin as many market participants were away on holiday." However, Saito added that the U.S. weather is forecast to improve this week, which means the rally may only last for a while.
A blizzard that paralyzed western New York over the Christmas weekend has killed more than two dozen people as crews struggled to dig out the region from its fiercest winter storm in decades. The larger storm system has disrupted travel across the country and caused power outages and energy production cuts, leading to higher heating and electricity prices.
Russia May Cut Oil Output by 5-7% in Early 2023
Russia may cut oil output by 5% to 7% in early 2023 in response to price caps, according to Deputy Prime Minister Alexander Novak. The news agency RIA cited Novak saying on Friday that the production cut would help Russia respond to price caps. The announcement contributed to the overall gains in oil prices seen on Monday.
