- Brent, US crude reached its highest level since early December
- G7 aims for two price caps for Russian oil products
- India’s crude oil imports hit a five-month high in December
NEW YORK, Jan. 23 (Reuters) – Oil prices rose about 1% on Monday to a seven-week high, extending last week’s gains on brighter prospects thanks to an expected economic recovery in major oil importer China this year .
Brent crude rose $1.12, or 1.3%, to $88.75 a barrel at 1:14 p.m. EST (1814 GMT). The session high was $89.09 a barrel, the highest since Dec. 1.
US West Texas Intermediate (WTI) crude rose 72 cents, or 0.9%, to $82.36. The session high was $82.64 a barrel, the highest since Dec. 5.
Asian trade slowed due to the Lunar New Year holiday, but analysts said optimism about China’s reopening is likely to push oil prices higher.
Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta, said the market wants to maintain long positions in case China resumes growth.
Data shows travel in China has surged after COVID-19 curbs eased, ANZ commodity analysts said in a note, noting that traffic congestion in the country’s top 15 cities is up 22% so far this month increased compared to the same month period last year.
Crude oil prices in many of the world’s physical markets have begun the year with a rally as China shows signs of increased buying and traders fear sanctions against Russia could limit supply.
“While the (China) reopening itself will undoubtedly prove complicated, especially during the holiday season, early indications suggest that activity has picked up, which means the economy could perform better,” said OANDA analyst Craig Erlam.
Brent is expected to return to a range between $90 and $100 as the oil market tightens, Erlam said.
Demand for products has boosted the oil market and refining margins, according to Phil Flynn, analyst at Price Futures Group. The 3-2-1 crack spread, a measure of refining margins, rose to $42.05 a barrel on Friday, the highest since October.
The coalition of the European Union and the Group of Seven (G7) imposes a price cap on Russian refined products from February 5, on top of the price cap on Russian crude oil that has been in place since December and an EU embargo on Russian crude imports oil by sea.
The G7 has agreed to postpone a review of the level of the Russian oil price cap until March, a month later than originally planned, to allow time to assess the impact of the price cap on oil products.
In India, crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up on discounted Russian fuel amid a steady increase in consumption in the country.
Reporting by Stephanie Kelly in New York; additional reporting by Ron Bousso in London, Mohi Narayan in New Delhi and Sonali Paul in Melbourne Editing by David Goodman, David Gregorio and Mark Potter
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