Oil Rises On Hopes Of China’s Covid Pivot

Crude oil prices surged close to 4 percent on Friday amidst hopes of a shift in China’s Zero Covid strategy and other Covid curbs. Aiding the rally were fears of a ban by the E.U. on Russian oil. Both Brent and WTI traded significantly higher compared to the levels on Thursday backed by hopes of a major upturn in demand.

The rally is also amidst data released by the U.S. Bureau of Labor Statistics that showed a nonfarm payroll employment increase of 261 thousand versus expectations of 200 thousand. Unemployment rate increased to 3.7 percent versus expectation of 3.6 percent. The labor market’s strength serves as a strong nod to the central bank to pursue the hawkish path it enumerated just two days earlier.

Data released on Wednesday by the US Energy Information Administration had showed U.S. crude oil inventories falling by 3.1 million barrels in the week ended October 28, versus market expectations of a 0.37-million-barrel increase. Inventories had increased by 2.59 million barrels in the preceding week.

The Dollar’s muted performance also aided the rally in crude oil prices. The Dollar Index, which measures the Dollar against a basket of six currencies dropped 0.66 percent to trade at 112.19.

West Texas Intermediate Crude Oil Futures for December settlement traded between a high of $91.95 and a low of $87.84. It is currently trading at $91.94, having increased 4.3 percent from the previous close of $88.17.

Brent Oil Futures for January settlement is currently trading at $98.22, up 3.75 percent from the previous close of $94.67. The day’s trade ranged between a high of $98.24 and a low of $94.19.

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