Oil prices rose on Monday amid optimism triggered by China’s reopening and the recovery of crude demand in the world’s second-largest economy.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.02 per cent higher at $79.85 a barrel at 4.40pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was up 1.1 per cent at $75.07 a barrel.
"There is no doubt that demand is being adversely influenced, and this is mainly because traders do not like the fact that central banks are dealing with their monetary policy," Naeem Aslam, chief market analyst at AvaTrade, said.
"However, not everything is so negative as China has vowed to fight all pessimism about its economy, and it will do what it takes to boost economic growth."
China, the world’s largest crude importer, aims to restore passenger flight volumes to 88 per cent of pre-coronavirus levels by the end of January, Caixin reported on Friday, citing the country’s aviation regulator.
Three years since the start of the Covid-19 pandemic, the country has shifted away from its zero-tolerance approach, despite a surge in new cases.
The US will replenish its emergency oil reserves, starting with a purchase of 3 million barrels of crude.
The purchase of barrels for delivery in February will follow a record 180-million-barrel release of oil from the country's Strategic Petroleum Reserve this year.
“This repurchase is an opportunity to secure a good deal for American taxpayers by repurchasing oil at a lower price than the $96 per barrel average price it was sold for, as well as to strengthen energy security,” the US Department of Energy said on Friday.
Crude prices rallied last week amid the closure of a key US pipeline and expectations of higher demand.
“Oil had a positive performance last week with [a] renewed potential energy crisis in Europe and renewed tensions in the Russian-Ukrainian war despite some build-up in inventories,” the National Bank of Kuwait said in a research note on Sunday.
Last week, the International Energy Agency increased its global oil demand growth estimate for this year and the next on rising crude consumption in India, China and the Middle East.
The agency now expects oil demand to grow by 1.7 million barrels per day in 2023, up from its previous estimate of 1.6 million bpd.
Oil demand will grow by 2.3 million bpd this year, a 140,000 bpd increase over the agency’s previous forecast.
“Despite the seasonal slowdown in world oil demand and continued macroeconomic headwinds, recent oil consumption data [has] surprised to the upside,” the IEA said.
Meanwhile, Opec stuck to its oil demand growth forecast for this year and 2023.
The oil producers’ group expects the world economy to grow by 2.8 per cent this year, up from its previous estimate of 2.7 per cent.