Oil rises on China possibly easing COVID curbs

  • China plans to reduce quarantine time for visitors – report
  • Imminent EU ban on Russian oil, OPEC+ cuts are supportive
  • US plan to sell oil reserves fails to lower prices

NEW YORK, Oct 20 (Reuters) – Oil prices rose more than 1% on Thursday following reports that China is considering easing COVID-19 quarantine measures for visitors, boosting hopes for increased demand for energy from the world’s largest oil importer.

Brent crude futures rose $1.30, or 1.4%, to $93.71 a barrel as of 11:07 a.m. EDT (1507 GMT).

U.S. West Texas Intermediate crude for November delivery, which expires Thursday, rose $1.76, or 2.1%, to $87.31 a barrel. WTI for December delivery rose $1.45, or 1.7%, to $85.97 a barrel.

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Beijing is considering reducing the quarantine period for visitors to seven days from 10 days, Bloomberg News reported Thursday, citing people familiar with the matter. Read more

China, the world’s biggest crude importer, has stuck to strict COVID restrictions this year, which have weighed heavily on trade and economic activities, reducing demand for fuel.

“We have a bit of a rally following the events in China,” said Bob Yawger, director of energy futures at Mizuho in New York. “This was seen as a positive demand indicator for the market.”

An impending European Union ban on Russian crude oil and petroleum products, as well as production cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, also supported prices.

OPEC+ agreed to a production cut of 2 million barrels per day in early October.

Separately, US President Joe Biden on Wednesday announced a plan to sell the rest of his release from the country’s Strategic Petroleum Reserve (SPR) by the end of the year, or 15 million barrels of oil, and begin to rebuild the stock as it attempts to mitigate high gasoline prices ahead of the Nov. 8 midterm elections.

The announcement failed to depress oil prices, however, as official US data showed the SPR fell last week to its lowest level since mid-1984, while trading oil stocks dropped unexpectedly.

“Yesterday’s failed attempt to cool oil prices is further evidence that the United States has lost influence in global oil markets,” said Stephen Brennock of PVM Oil.

Meanwhile, global fuel demand remains uncertain. U.S. economic activity has edged up in recent weeks, though it has held steady in some regions and declined in a few others, the Federal Reserve said in a report on Wednesday that showed businesses were growing increasingly pessimistic about to prospects.

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Reporting by Stephanie Kelly in New York; Additional reporting by Ahmad Ghaddar in London and Emily Chow in Singapore; Editing by Marguerita Choy and Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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