U.S. oil prices on Thursday marked their highest settlement in two weeks, as China moved to ease some COVID-19 curbs and traders awaited a weekend meeting of OPEC+ ministers.
West Texas Intermediate crude for January delivery
rose 67 cents, or 0.8%, to settle at $81.22 a barrel on the New York Mercantile Exchange. Prices for the front month contract settled at their highest since Nov. 17, according to Dow Jones Market Data.
February Brent crude
the global benchmark, gave up early gains to finish 9 cents, or 0.1% lower, at $86.88 a barrel on ICE Futures Europe.
Back on Nymex, January gasoline
fell 1.8% to $2.342 a gallon, while January heating oil
settled at $3.2624 a gallon, down 3%
January natural gas
declined by 2.8% to $6.738 per million British thermal units.
Crude found some support as China showed further signs it will move to ease COVID curbs after a series of rare but widespread protests. China’s COVID restrictions have crimped demand from one of the world’s largest energy consumers.
“While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its COVID-zero policy will and should be welcomed,” said Craig Erlam, senior market analyst at OANDA, in a market update. “The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.”
In Beijing, officials will let those infected patients who are low risk to quarantine at home for a week, rather than in a government center, Bloomberg reported, citing sources. China has required anyone with any degree of COVID to stay at those government sites to cut transmission.
Traders are also focused on a Dec. 4 meeting of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. The group’s decision earlier this week to make the meeting virtual rather than in-person was seen as a sign by some analysts that it would likely hold production steady.
Read: Oil-price volatility complicates Sunday’s OPEC+ decision on production levels
Tom Kloza, global head of energy analysis at the Oil Price Information Service, a Dow Jones company, said he has “minimal expectations for this OPEC+ meeting, particularly since it’s in the ‘virtual’ space.” A “rollover of current agreement is baked into the numbers,” he said.
The OPEC+ meeting will come just a day ahead of the European Union’s embargo on Russian seaborne oil.
Read: U.S. oil taps its lowest price of the year thanks to China as OPEC+ output decision looms
A week ago, it would have seemed likely that OPEC+ would cut production quotas, Michael Lynch, president of Strategic Energy & Economic Research, told MarketWatch.
However, “with the apparent easing in China’s COVID policy, the possibility that the [Federal Reserve] is going to slow its interest rate hikes, and the somewhat improved inflation news, it seems more likely that they will keep production steady,” he said.
“I think that the EU price cap on Russian oil will not be a major factor in their decision, except inasmuch as it seems the Russians will be able to continue to find customers for their oil who will ignore the price cap,” added Lynch.
On Wednesday, crude saw sharp gains after the Energy Information Administration on Wednesday reported that U.S. crude inventories dropped 12.6 million barrels for the week ended Nov. 25. That marked a third straight weekly decline.
Also, remarks Wednesday by Fed Chairman Jerome Powell that were seen affirming expectations that policy makers will likely deliver a smaller 50 basis point rate hike when they meet later this month sent the U.S. dollar skidding and helped lift crude.
A weaker dollar makes dollar-denominated commodities cheaper to users of other currencies.
In other energy news, the EIA on Thursday reported that domestic natural-gas supplies fell by 81 billion cubic feet for the week ended Nov. 25. Analysts surveyed by The Wall Street Journal forecast a decline of 88 billion cubic feet.
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