NEW YORK — Oil prices rose by around 1% on Monday to a seven-week high, extending last week’s gains on the back of a stronger outlook thanks to an expected economic recovery in top oil importer China this year.
Brent crude was up $1.12, or 1.3%, at $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.
U.S. 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 trading was slower because of the Lunar New Year holiday, but analysts said optimism over China’s reopening is likely to drive oil prices higher.
Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta, said the market wants to preserve long positions in case Chinese growth resumes.
Data shows a solid pick-up in travel in China after COVID-19 curbs were eased, ANZ commodity analysts said in a note, pointing out that road traffic congestion in the country’s 15 key cities so far this month is up 22% from the same period last year.
Crude oil prices in much of the world’s physical markets have started the year with a rally as China has shown signs of more buying and traders have worried that sanctions on Russia could tighten supply.
“While the (China) reopening itself will no doubt prove to be complicated, particularly over the holiday season, early indications suggest there has been a rise in activity, meaning the economy could perform better,” said OANDA analyst Craig Erlam.
Brent is expected to move back into a range between $90 and $100 as the oil market tightens, Erlam said.
Demand for products has lifted the oil market and refining margins, according to Phil Flynn, analyst at Price Futures group. The 3-2-1 crack spread
The European Union and Group of Seven (G7) coalition will cap prices of Russian refined products from Feb. 5, in addition to the price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.
The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to provide time to assess the impact of the oil products price cap.
In India, crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up 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)