Oil Rises with Demand Outlook Optimism

China’s generous quota for crude imports boosted oil with renewed hopes for a demand revival in the world’s largest buyer. 

West Texas Intermediate rose 1.2% to settle above $74 a barrel on Monday. China issued a fresh batch of crude oil import quotas, a signal it’s gearing up to meet higher demand. A weaker dollar also boosted the appeal of commodities priced in the currency. Prices rallied as much as 4% intraday but with the forward curve still flashing weakness ahead, many traders said prices near $77 were a trigger to sell.

This week also marks the beginning of the annual rebalancing of the largest commodity indexes, a period usually characterized by volatile flows across raw materials markets. The period should see more than $1 billion of inflows into the global Brent benchmark, while leading to outflows from WTI, according to separate estimates from Citigroup Inc. and Societe Generale SA. 

Prices:

• WTI for February delivery advanced 86 cents to settle at $74.63 a barrel in New York.
• Brent for March settlement rose $1.08 to settle at $79.64 a barrel.

Crude had a sluggish start to the year, posting a drop of around 8% last week as nearby oil markers flash signs of weakness. For now traders are awaiting signs of a meaningful uptick in Chinese demand, though there has been improvement in mobility gauges over recent days.