Oil Market Jumps 2% as China Relaxes COVID-19 Curbs

By Adedapo Adesanya

The crude oil market settled higher on Friday but fell week-on-week after health authorities in China eased some of the country’s heavy COVID-19 curbs.

Brent crude futures gained $2.32 or 1.1 per cent to close at $95.99. However, on a week-on-week basis, it fell by 2.6 per cent this week.

As for the United States West Texas Intermediate (WTI) crude futures, it appreciated by 2.9 per cent or $2.49 yesterday to trade at $88.96 a barrel but went down by nearly 4 per cent w-o-w.

Prices were supported as China on Friday eased some of its COVID curbs, including shortening quarantine times and scrapping a penalty on airlines that bring in infected passengers.

The new rules were among the 20 measures examined at the first meeting of the new top leadership body of the ruling Communist Party on Thursday, amid a new push to optimise and improve COVID control policies.

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

Also, under the new rules, quarantine for close contacts will be cut to five days at a centralised location plus three days at home, from seven days centralised and three days at home.

The suspension of international flight routes due to the detection of infected passengers was also abolished, while for inbound travellers, the pre-departure COVID test requirement was cut to once in 48 hours from twice.

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

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

The Organisation of the Petroleum Exporting Countries and allies (OPEC+) will remain cautious of oil production, noting that members saw “uncertainties” in the global economy.

Last month, the group agreed to steep production cuts and will meet again on December 4 to set its policy. They are meeting a day before the European Union (EU) triggers its ban placed on Russia for attacking Ukraine.