Oil prices hit three-week highs on Tuesday, finding support in China’s latest easing of COVID restrictions on travel and concerns that the extreme winter weather in the US is curbing energy output.
Brent crude futures rose 0.3% to $84.77 per barrel, while the US West Texas Intermediate (WTI) crude futures gained 0.3% to $79.87 per barrel. The two benchmarks reached their highest levels since December 5, earlier in the session.
China Eases COVID Travel Restrictions, US Blizzard Impact
Driving prices up was China’s move to lift quarantine requirements to inbound travelers starting in January, a rule implemented since the start of the pandemic.
According to the National Health Commission, from January 8, people arriving in the country will no longer be subject to quarantine. However, they will need negative COVID-19 results within 48 hours of departure.
The announcement raised the possibility of better demand from major oil importer China while it weakened the dollar.
In addition, a heavy winter blizzard left Buffalo, New York, in a deep freeze on Sunday, blocking roads, taking down power lines, and raising the number of fatalities from storms that have covered much of the US in snow and ice for days.
The snowstorm has seen airlines cancel almost 2,700 US flights over the weekend after the cold weather disrupted airport operations across the US.
Heating and electricity prices in the country edged higher as the freeze and blowing winds caused power outages and halted energy output on Friday.
Chief analyst Kazuhiko Saito said concerns over supply disruption from the US’s winter storms triggered buying, but trade was thin as many traders were away on holiday. Still, Saito added that the weather in the country is expected to be better this week, signaling the rally may be short-lived.
Concerns over a potential output cut by Russia also drove oil prices up. Citing comments from Russian Deputy Prime Minister Alexander Novak, a state-owned news agency reported that the country is seen slashing production by 5% to 7% next year in response to price curbs.
