Friday, March 29

Oil jumps by over 2% as China eases COVID curbs


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SINGAPORE — Oil prices jumped more than 2% on Friday after health authorities in China, the top global crude importer, eased some of the country’s heavy COVID curbs.

Brent crude futures rose $2.39, or 2.6%, to $96.06 a barrel by 0745 GMT, extending a 1.1% rise in the previous session.

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US West Texas Intermediate (WTI) crude futures gained $2.24, or 2.6%, to $88.71 a barrel, after climbing 0.8% in the previous session.

The easing curbs include shortening quarantine times for close contacts of cases and inbound travelers by two days, as well as eliminating a penalty on airlines for bringing in infected passengers.

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“Oil traders are applauding the news. The key for oil markets is to continue watching developments closely for this and further marginal positive changes in the government’s zero-COVID stance,” said Stephen Innes, managing partner at SPI Asset Management.

The move towards liberalizing the COVID-zero policy will provide a springboard for oil markets, given that lockdowns hurt mobility and oil prices more than economic activity, he said.

Prices also picked up on Friday after milder-than-expected US inflation data reinforced hopes that the Federal Reserve would slow down rate increases, boosting chances of a soft landing for the world’s biggest economy.

A weaker US dollar also supported oil prices as it makes the commodity cheaper for buyers holding other currencies.

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Still, the benchmark oil contracts were headed for weekly declines of more than 1% due to rising US oil inventories, and lingering fears over capped fuel demand in China amid an uptick in daily COVID cases.

China’s COVID-19 case load soared to its highest since the lockdown in Shanghai earlier this year. Both Beijing and Zhengzhou reported record daily cases.

Besides work-from-home orders reducing mobility and fuel demand, travel across China remained subdued as people wanted to avoid the risk of being caught up in quarantine, ANZ Research analysts said in a note. (Reporting by Sonali Paul in Melbourne and Jeslyn Lerh in Singapore; Editing by Bradley Perrett, Simon Cameron-Moore, Tom Hogue and Gerry Doyle)

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financialpost.com