On Expectations of Increased Chinese Demand, Oil Prices Rise

Markets were optimistic about a rebound in fuel consumption, which resulted in an increase in oil prices on Wednesday. China continues to remove its COVID-19 restrictions.

Brent futures for February delivery were up 31 cents to $84.64 a barrel by 01:17 GMT, a 0.4% increase. The price of U.S. crude rose by 22 cents, or 0.3%, to reach $79.75 a barrel. On Tuesday, the two benchmarks rose to their highest level in three weeks as a result of the positive market mood.

There is anticipation that demand for petroleum will rise as China, the second-largest economy in the world, gets ready to reopen its borders next month after three years of severe restrictions on trade and travel to stem the spread of COVID.

Prices were raised further by news that, in accordance with a directive from President Vladimir Putin, Russia expects to stop supplying oil to countries that comply with a G7 pricing quota set on December 5 as of February 1.

Elsewhere Oil and gas production from North Dakota and Texas has been reduced, interrupting the U.S. supply, as a result of an Arctic blast that brought temperatures well below freezing. Oil refiners were working to restart a dozen plants that had been closed due to the extreme cold on Tuesday.This recuperation might occasionally last into January.

According to an early Reuters poll published on Monday, distillate inventories and U.S. crude oil stocks were both predicted to fall by 1.6 million barrels each. [EIA/S]

The American Petroleum Institute is expected to provide data on American crude inventories on Wednesday at 4.30 p.m. EDT (20.30 GMT). The U.S. Department of Energy's statistical office, the Energy Information Administration, will release its own numbers on Thursday at 10.30 a.m. (1430 GMT).