Oil price rises to $78 a barrel amid hopes of increased China demand

Oil prices rose on Friday on hopes that China, the world’s largest crude importer, would increase its demand.

Brent crude increased 0.15 percent to $78.81 a barrel at 10.00 GMT+1.

The US West Texas Intermediate crude futures also rose by 0.12 percent to $77.58 a barrel.

TheCable had reported that the price of the commodity surged to $83.77 a barrel.

The peak was sustained at $86 a barrel as at January 30, 2022, before embarking on a downward trend to $77 on Wednesday.

The latest oil price rise has been linked to the restarting of economic activities in China and the support interventions announced by the authorities for the country’s real estate sector.

“China’s reopening optimism, especially further stimulus measures to boost the property sector, is the main bullish factor for the oil prices, which has improved the demand outlook in the near year.

“A softened U.S. dollar has also added upside momentum to the oil markets,” Tina Teng, an analyst at CMC Markets, said.

On Thursday, China announced more state support measures, including establishing a dynamic adjustment mechanism on mortgage rates for first-time home buyers, in a bid to boost its highly indebted property sector, which accounts for a quarter of the country’s economy.

In a move that could bolster oil demand, China said daily passenger flights scheduled during the upcoming Lunar New Year, starting Saturday, averages about 11,000 — 73 percent of the pre-COVID-19 level in 2019.

On Friday, transport officials said the total number of passenger trips via road, rail, water and air during the holiday season is expected to reach 2.1 billion this year, double the 1.05 billion during the same period last year.

Th Asian nation has also ended its stringent zero-COVID-19 policy, leading to a surge in coronavirus infections across the country.

Meanwhile, in the United States of America, data from the Energy Information Administration showed on Thursday, that distillate inventories, which include diesel and heating oil, dropped more than expected in the week to December 30.

The inventories fell by 1.4 million barrels, compared with expectations of a 396,000-barrel drop.

The US gasoline stocks fell by 346,000 barrels last week, according to the EIA data, compared with analysts’ expectations for a 486,000-barrel drop.