SINGAPORE - Oil prices rose to three-week highs on Tuesday as China took more steps to unwind its zero-Covid policy, and freezing weather across the United States prompted refinery closures in the vital Texas Gulf Coast area.
Brent crude was up 88 US cents, or 1.1 per cent, at US$84.80 a barrel by 10.53am Singapore time, while US West Texas Intermediate (WTI) crude was at US$80.44 a barrel, up 88 US cents, or 1.1 per cent. The two benchmarks touched their highest since Dec 5 earlier in the session.
Last Friday, Brent rose 3.6 per cent, while WTI gained 2.7 per cent. Both benchmarks recorded their biggest weekly gains since October. British and US markets were closed on Monday for the Christmas holiday.
China will end its quarantine requirements for inbound travellers starting on Jan 8, the National Health Commission said on Monday, dropping a rule in place since the start of the pandemic three years ago. That spurred optimism of higher demand from the top crude oil importer.
The US dollar softened on Tuesday following this announcement. A weaker dollar makes oil cheaper for holders of other currencies and usually reflects greater investor appetite for risk.
A lethal blizzard paralysed Buffalo, New York, on Christmas Day, trapping motorists and rescue workers in their vehicles, leaving thousands of homes without power and raising the death toll from storms that have chilled much of the US for days.
Airlines had cancelled nearly 2,700 US flights as at last Saturday afternoon after the weather snarled airport operations around the country.
Frigid cold and blowing winds last Friday knocked out power and cut energy production across the US, driving up heating and electricity prices.
“Fears over supply disruption from winter storms in the US prompted buying, though trade was thin as many market participants were away on holiday,” said Mr Kazuhiko Saito, chief analyst at Fujitomi Securities.
“But the US weather is forecast to improve this week, which means the rally may not last too long,” he said.
Concerns over a possible production cut by Russia also contributed to gains.
Russia may cut oil output by 5 per cent to 7 per cent in early 2023 as it responds to price caps, the RIA news agency cited Deputy Prime Minister Alexander Novak as saying last Friday. REUTERS, BLOOMBERG