Oil Continues Four Day Rally

Oil futures rose with China further easing Covid restrictions and the US considering a pause in sales from its strategic reserves. 

West Texas Intermediate edged higher Thursday to $81.22 a barrel, rising for a fourth straight session to the highest in two weeks. Markets opened higher on news that Beijing will allow some virus-infected people to isolate at home, a significant shift from Covid-Zero policies that threatened to strangle economic growth for the world’s largest importer of crude.

While traders express cautious optimism on China’s improving outlook, oil supply could tighten with SPR releases drying up. The Biden administration is seeking to stop strategic oil sales so it can refill the emergency reserve.

“Crude is riding the tailwinds of a sentiment shift regarding China’s Covid policy, the weaker dollar and the risk asset rally,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.

Crude is headed for a weekly gain as demand prospects brighten, despite touching the lowest since late 2021 on Monday. The latest shift will form the backdrop for a Dec. 4 virtual meeting of the Organization of Petroleum Exporting Countries and its allies. Meanwhile, traders await news of a plan to cap the price of Russian crude, which could be set at $60 a barrel.

Prices:

• WTI for January delivery rose 67 cents to settle at $81.22 a barrel in New York.
• Brent for February settlement fell 9 cents to settle at $86.88 a barrel.

The European Union is looking at a mechanism that would allow for regular alterations and revisions to the price cap on Russian crude, people familiar with the matter said. The bloc is racing to agree on the measure ahead of the planned implementation of its sanctions on Dec. 5.