Tuesday saw a three-week high in oil prices thanks to China's latest relaxation of COVID-19 regulations, which spurred increased demand for fuel. News that winter storms are impacting energy output all around the U.S. also kept prices up.
On Christmas Day, a deadly blizzard paralyzed Buffalo, New York, cutting off power to thousands of homes, locking motorists and emergency personnel in their cars, and adding to the toll from storms that had been freezing much of the country for days.
Brent crude was up 88 cents, or 1.1%, to $84.80 per barrel. West Texas Intermediate crude was trading at $80.44 per barrel, up 88 cents, or 1.1%. Earlier in the day, the two benchmarks reached their highest levels since Dec. 5.
Brent increased by 3.6% on Friday, while WTI increased by 2.7%. Both indexes posted their largest weekly advances since October. The markets in the U.K. and the U.S. were closed on Monday for the Christmas holiday.
The National Health Commission announced on Monday that China will stop requiring entering travelers to undergo quarantine as of January 8. This ends a policy that had been in effect since the pandemic began three years ago. The leading crude oil importer became more optimistic about rising demand as a result.
In response to this news, the dollar weakened on Tuesday. Oil costs less for holders of other currencies when the dollar is lower, and this typically indicates that investors are more willing to take on risk.
On Friday, bitter cold and strong winds curtailed energy production across the country and caused power outages, raising the cost of electricity and heating.
"Fears over supply disruption from winter storms in the U.S. prompted buying, though trade was thin as many market participants were away on holiday," Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd said.
As of Saturday afternoon, approximately 2,700 U.S. flights had been canceled by airlines due to weather-related delays at airports around the U.S.
"But the U.S. weather is forecast to improve this week, which means the rally may not last too long," he said.
Concerns about a probable Russian output cut also led to advances.
Russia may reduce oil output by 5% to 7% in early 2023 in response to price limitations, Deputy Prime Minister Alexander Novak said on Friday, according to the RIA news agency.
