- Brent crude and US crude hit their highest levels since early December
- The G7 group of industrialized nations seeks to set a price cap for Russian oil products
- India’s crude imports hit a five-month high in December
NEW YORK (Reuters) – Oil prices rose nearly 1 percent on Monday to a seven-week high, extending last week’s gains on stronger expectations thanks to an expected economic recovery in China, the largest oil importer, this year.
Brent crude rose $1.12, or 1.3 percent, to $88.75 a barrel at 1:14 pm ET (1814 GMT). The highest price for the session was $89.09 a barrel, the highest level since December 1.
US West Texas Intermediate crude rose 72 cents, or 0.9 percent, to $82.36. The highest price for the session was 82.64 dollars a barrel, the highest level since the fifth of December.
Asian trade was slower due to the Lunar New Year holiday, but analysts said optimism about China’s reopening is likely to push oil prices higher.
Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta, said the market wanted to hold long positions if Chinese growth resumed.
The data shows a strong rebound in travel in China after the easing of COVID-19 restrictions, commodities analysts at ANZ said in a note, noting that road traffic congestion in 15 major cities in the country so far this month has risen 22% from the same level. period last year.
Crude oil prices in many physical markets in the general world started higher as China showed signs of further buying and traders worried that sanctions imposed on Russia could lead to a tightening of supplies.
“While reopening (China) will undoubtedly be complex, particularly during the holiday season, initial indications are that there will be a pickup in activity, which means the economy can do better,” said OANDA analyst Craig Erlam.
Erlam said Brent crude is expected to return to the $90-$100 range as the oil market tightens.
Demand for the products has pushed up the oil market and refining margins, according to Phil Flynn, an analyst with Price Futures Group. The 3-2-1 crack spread, a proxy for refining margins, rose to $42.05 a barrel on Friday, the highest level since October.
The EU and Group of Seven (G7) alliance will put a price cap on Russian refined products from February 5, in addition to the Russian crude price cap in place since December and the EU’s ban on Russian crude imports by sea.
The Group of Seven agreed to postpone the review of the level of the Russian oil price ceiling to March, a month later than originally planned, to buy time to assess the impact of the price ceiling for oil products.
Government data showed today, Monday, that India’s crude oil imports rose to a five-month high in December, as refineries stockpiled discounted Russian fuel amid a steady increase in consumption in the country.
(Reporting by Stephanie Kelly in New York; Additional reporting by Ron Bousso in London, Mohi Narayan in New Delhi, and Sonali Paul in Melbourne; Editing by David Goodman, David Gregorio and Mark Potter
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