Oil prices spike on hopes for China demand boost

• Brent futures for February delivery increased 31 cents, or 0.4%, to $84.64 per barrel.
• Both benchmarks reached their highest level in three weeks on Tuesday.
• Russia intends to limit oil deliveries to nations that adhere to a G7 price cap.

On Wednesday, oil prices increased as investors were confident about the rebound of fuel demand as China begins to lift Covid-19 limitations.

At 01:17 GMT, Brent futures for February delivery increased 31 cents, or 0.4%, to $84.64 per barrel. U.S. crude climbed 22 cents, or 0.3%, to $79.75 per barrel. Tuesday, amid an upbeat market climate, both benchmarks reached their highest level in three weeks.

As the world’s second-largest economy prepares to reopen its borders next month following three years of strict restrictions on movement and business to combat the spread of Covid, there are hopes that demand for fuel will increase.

The announcement that Russia intends to limit oil deliveries to nations that adhere to a G7 price cap imposed on December 5 further bolstered prices. President Vladimir Putin issued an order to this effect on December 5.

Elsewhere North Dakota and Texas have been unable to produce oil and gas as a result of a blast from the Arctic that has brought temperatures well below freezing. On Tuesday, oil refiners were scrambling to resume operations at a dozen plants rendered inoperable by the deep freeze, a process that will in some cases extend into January.

In the meantime, crude oil inventories in the United States are projected to have decreased by 1.6 million barrels, according to a preliminary Reuters poll released on Monday.

Wednesday at 4.30 p.m. EDT (2030 GMT), the American Petroleum Institute is slated to release data on U.S. crude inventories. Thursday at 10.30 a.m. (1430 GMT), the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will issue its own data.

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