Oil Rises after Wavering in Weak Trading Session

Oil tipped higher as investors weighed a pledge from China to revive consumption against broader low-risk sentiment.

West Texas Intermediate settled above $75 a barrel, ending the day higher for the first time in three sessions, after flip-flopping in a narrow range on Monday. Market participants saw Chinese President Xi Jinping’s pledge to focus on the economy as supporting energy demand— even as Covid cases surge and the economic reopening of the country gets bumpy. 

Meanwhile, markets shied away from risky assets as the outlook for global growth has dimmed in the face of more expected interest-rate hikes. Crude markets are more susceptible to tracking broader markets as liquidity in the commodity declines before the holidays.

It’s another day of “fragile trading” where markets are bid following headlines from China reopening, said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “At the end of the day, conviction to buy the dip is still quite low.”

Oil is still headed for a second monthly loss as concerns about recessions in the US and Europe mount, with central banks continuing to tighten policy. In addition, Russian flows have so far proven resilient as a price cap imposed by the Group of Seven and European Union hasn’t led to major disruptions. Among major buyers, India said it doesn’t expect problems.

Prices:

• WTI for January delivery, which expires Tuesday, rose 90c to $75.19 a barrel at settlement
• Brent for February settlement gained 76c to $79.80 a barrel

In the US, authorities are moving to replenish the Strategic Petroleum Reserve, starting with a 3-million barrel, fixed-price purchase, the Department of Energy said on Friday. The announcement caps a year that saw President Joe Biden order an unprecedented release from the SPR to help curb soaring domestic energy costs, which spiked after Russia’s invasion of Ukraine.