Oil futures: Crude higher as China relaxes Covid measures, US storm impact lingers
Quantum Commodity Intelligence - Crude oil futures Tuesday were up from pre-holiday levels as the US winter storms boosted power demand, while a further opening up of China lifted demand optimism for 2023.
Front-month February ICE Brent futures were trading at $85.11/b (1845 GMT), close to the earlier three-week high of $85.50/b and compared to the pre-holiday settle of $83.92/b.
At the same time, Feb23 NYMEX WTI was trading $80.40/b versus Friday's settle of $79.56/b.
Stretching from the Great Lakes near Canada to the Rio Grande on the Mexican border, the US storm was seen supporting prices as heating oil and power demand surged, while oil and gas output was hit, including in North Dakota.
"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," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
However, the cold snap was seen as negative for gasoline demand, with less driving over the holiday season, while more than 1,200 flights had been cancelled by early Monday, with at least 500 more delayed.
The National Weather Service said that "hazardous travel conditions" were expected to continue over the next few days and that they would slowly ease over the new year.
"Much of the eastern US will remain in a deep freeze through Monday before a moderating trend sets in on Tuesday." Weather forecasters expect temperatures to rise throughout the week, returning to above seasonal averages later in the week.
Meanwhile, oil prices were also lifted as China announced it would end quarantine requirements for inbound travellers from 8 Jan., while Beijing also said it has stopped publishing daily Covid-19 case numbers.
The National Health Commission said Sunday that "relevant outbreak information" would instead be published by China's CDC, a sub-department managed by the NHC. The decision to delegate its case counts to a lower authority comes as China experiences an unprecedented coronavirus wave following a drastic easing of restrictions.
Chinese nationals have also rushed to book overseas travel as authorities also relaxed restrictions on outbound travel.
Geopolitical concerns in North Asia were raised as China sent military aircraft across the median line of the Taiwan Strait on Sunday, its largest incursion into Taiwan's air defence zone in recent months, reported CNN.
Chinese military's Eastern Theater Command said Sunday it conducted joint combat readiness patrol and "strike drills" around Taiwan, in response to "provocations" between Taiwan and the United States, without providing specific details.
On Friday, US President Joe Biden signed a sweeping new defence bill into law that included the establishment of a defence modernisation programme for Taiwan to deter Chinese aggression.
