Oil Gains 1% As Bulls Await China's Reopening

After the worst week in a month to start the new year, crude prices rose just 1% on Monday as market bulls bet that China's reopening from tough COVID controls will stimulate oil consumption.

West Texas Intermediate, or WTI, crude finished up 86 cents, or 1.2%, at $74.63 a barrel on the New York Mercantile Exchange in the opening session of the second week of January.

Last week's drop in U.S. crude was the greatest since December 2. WTI had its worst first two trading days of any year since 1991.

Brent crude in London rose $1.08, or 1.4%, to $79.65 a barrel after touching $78.42. Brent, like WTI, fell more than 8% last week.

China reopened its borders to international trade on Monday, erasing the last signs of COVID restrictions that restricted most of its social programs for three years.

China's oil demand usually rises after the Lunar New Year, which is in January. Beijing's change from COVID-zero to "COVID-anything" makes oil demand prediction unachievable. Chinese industrial production fell for the seventh straight month in December as coronavirus incidence rose.

Officials forecast around 2 billion domestic travels during the Lunar New Year season, about double the amount from last year and 70% of 2019 levels.

In oil-specific news, China released a second batch of crude import licenses for 2023, raising the amount by 20% compared to last year.

"Oil's downward trend was nearing crucial support, therefore energy traders were eager to re-enter the oil market," said OANDA analyst Ed Moya. "Chinese hopes for COVID reopening could raise oil prices"