Oil prices recovered on Monday after falling more than $2 a barrel in the previous session, as optimism about China’s reopening and a recovery in oil demand outweighed worries about a global recession.
Brent crude futures were up 72 cents, or 0.9 percent, at $79.76 a barrel, while U.S. West Texas Intermediate crude was up 60 cents, or 0.8 percent, at $74.89 a barrel.
China, the world’s top crude importer and second-largest oil consumer, is experiencing the first of three expected waves of Covid-19 cases after Beijing eased restrictions on mobility.
“Despite the rise in Covid cases, optimism about the reopening and accommodative policies are improving the outlook for oil demand,” said CMC Markets analyst Tina Teng.
News on Friday To the website reports that China plans to increase flights with the goal of restoring the country’s average daily passenger flight volume to 70 percent of 2019 levels by January 6.
China’s diesel and gasoline exports continued to rise in November, hitting the highest level in a year, as refiners rushed to use up their 2022 export quotas and sell off growing stocks.
Brent and WTI rose more than 3 percent last week as the Canada-US pipeline remained shut and its operator TC Energy Corp focused on cleaning up the oil spill. The shutdown of the pipeline, which could send 622,000 barrels of Canadian crude a day to US refineries, helped lower US heavy crude prices.
The US Energy Department’s announcement on Friday that it would begin buying back oil for the Strategic Petroleum Reserve also supported the outlook for higher prices.
This would be the first purchase by the United States after this year’s record draw of 180 million barrels.