Oil rebounds to top US$100 with China easing some virus lockdowns
BNN Bloomberg
Oil gained -- after sliding 4% on Monday -- as investors assessed the outlook for Chinese demand following the easing of some virus restrictions in Shanghai.
Oil rallied with partial easing of virus restrictions in Shanghai brought some optimism over demand as Russian President Vladimir Putin vowed to continue his country’s invasion of Ukraine.
West Texas Intermediate rallied more than 6 per cent to over US$100 a barrel as volatility jumped and oil regained the ground it had lost at the start of the week. Shanghai has eased lockdowns for some housing complexes, but most people remained confined to their homes, and authorities have indicated they will reimpose restrictions if virus cases climb. Meanwhile, the Russian president said peace talks with Ukraine are “at a dead end,” and vowed to continue the invasion.
“The crude correction appears to be over as China begins to lift some of their lockdowns,” said Ed Moya, senior market analyst at Oanda. “The energy market has now mostly priced in the coordinated strategic petroleum release and probably was overly pessimistic on how far China would stick to their strict lockdown and isolation measures.”
The oil market’s structure has softened markedly in recent weeks as concerns over supply have eased with some Russian barrels finding their way into the market. A planned release of emergency reserves and China’s demand worries have helped calm prices, and pressured differentials for supplies from the Middle East to West Africa.
Still, the threat of losing Russia supply continues inject risk into the market. “We are losing Russian production fast, we estimate it’s around 10 million barrels a day already and falling as storage is full,” said Christopher Haines, analyst at Energy Aspects.
