Oil Advances After China Eases Some Strict Covid Zero Measures
Oil headed for a weekly loss of over 6% as China continues to grapple with swelling Covid cases, weighing on the outlook for demand.
(Bloomberg) -- Oil jumped after China announced some easing of its strict Covid Zero measures, a move that could spark more local and international travel and lift commodity demand.
China reduced the amount of time people entering the country must spend in quarantine and will scrap a system that penalizes airlines for bringing Covid cases into the nation, according to the National Health Commission. West Texas Intermediate futures advanced almost 3% to trade above $88 a barrel.
See also: Commodities Surge After China Eases Some Covid Restrictions
“These moves were in the offing for some time, but they are going to further fuel speculation over a broader relaxation of China’s Covid control measures, which is bullish for energy and commodities,” said Vandana Hari, the founder of Vanda Insights in Singapore.
Covid Zero relies on lockdowns and mass testing to stamp out infections, a policy that’s weighed on China’s economy this year. Despite the strategy, daily cases have climbed to the highest since April. Investors have been watching for clues on any relaxation, with markets whipsawed recently by rumors of easing.
Oil has lost almost a third of its value since early June on concerns over a global economic slowdown and aggressive monetary tightening by central banks. Crude had edged higher earlier in the session along with broader markets after data showed slower-than-projected US inflation.
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