Oil rebounds from 2022 lows on hopes of revived demand from China

London — Oil rebounded on Thursday after four sessions of decline, boosted by hopes that easing anti-Covid measures in China will revive demand and by signs that some tankers carrying Russian oil have been delayed after a G7 price cap came into effect.

China on Wednesday announced the most sweeping changes to its resolute zero-Covid regime since the outbreak of the pandemic, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s ports in the Black Sea.

Brent crude rose 29c, or 0.4%, to $77.46 a barrel by 9.05 GMT, while West Texas Intermediate (WTI) gained 73c, or 1%, to $72.74.

“Today, we do see some green price action,” said Naeem Aslam, an analyst at Avatrade. “Prices are oversold due to the intense sell-off for the past few days. However, the price action still doesn’t show a strong bullish bias.”

Brent and WTI fell to 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and EU rolled out new the restrictions on December 5 aimed at Russian oil exports.

The queues suggest that “available supply from the Black Sea is already affected by the punitive measure,” said Tamas Varga of oil broker PVM.

“In a healthy economic climate, such a development would be the equivalent of firing the starting gun in the race back to $100.”

Concerns of economic slowdown, weakening fuel demand and the prospect of more interest rate hikes in the US weighed on sentiment. The Federal Reserve is widely expected to raise interest rates by 50 basis points next week.

While US crude inventories fell last week, petroleum and distillate inventories surged, adding to concern about easing demand.

Reuters