Futures on US West Texas Intermediate Crude Oil rose 2% on Friday, as investors were weighing concerns over China demand and developments surrounding a Western price cap on Russian oil.
According to Virendra Chauhan, head APAC analyst at Energy Aspects, concerns over Chinese oil demand, thin market liquidity as well as assessments over how severe the recession could be are the main price-driving factors so far.
There have been indications that rising COVID-19 infections in the largest oil importer globally, China, are beginning to affect fuel demand, as traffic has decreased and implied oil demand stands at 13 million barrels per day – 1 million barrels per day below the average level, according to ANZ analysts.
China reported a new daily record for COVID-19 cases on Friday, with a number of cities still enforcing mobility measures and other restrictions to control outbreaks.
With regard to the price cap on Russian oil, G7 and European Union diplomats have been discussing prices between $65 and $70 per barrel, as they aim to restrict revenue that Moscow uses to finance its military operations in Ukraine without causing a disruption to the oil market globally.
Russia’s President Vladimir Putin has said that the country will not deliver oil and gas to any nations that join in imposing the price cap.
As of 10:40 GMT on Friday WTI Crude Oil Futures were gaining 2.00% to trade at $79.50 per barrel.
WTI Crude Oil Futures for delivery in January were set to register a 0.75% loss for the week, which would be a third straight weekly decline.
At the same time, Brent Oil Futures were gaining 1.46% on the day to trade at $86.59 per barrel.
Brent Oil Futures for delivery in January were set to register a 1.39% loss for the week, which would be a third straight weekly drop.