Early Asian trade on Thursday saw a sharp increase in oil prices, driven by signals of tighter supply and hope for a resurgence in Chinese demand. Brent oil prices were up 5 cents, or 0.06%, to $87.02 per barrel, while U.S. West Texas Intermediate crude futures were up 16 cents, or 0.2%, to $80.71.
A day after protesters in southern Guangzhou battled with police amid a wave of demonstrations against the strictest coronavirus restrictions in the world, the enormous Chinese cities of Guangzhou and Chongqing announced an easing of COVID controls on Wednesday. However, official PMI data released on Wednesday indicated that Chinese company activity continued to decline in November, fueling concerns about the upcoming year.
The availability of crude oil is anticipated to remain limited. According to the Energy Information Administration, U.S. crude oil stocks fell by about 13 million barrels in the week ending Nov. 25, the largest since 2019. But according to the EIA, U.S. crude oil production increased to more than 12 million barrels per day, the highest level since before the coronavirus outbreak began.
In order to maintain oil prices, U.S. Federal Reserve Chair Jerome Powell stated on Wednesday that it was necessary to decrease the rate of upcoming interest rate increases. Gains are effectively capped by the OPEC+ agreement to conduct its meeting on December 4, according to a person with direct knowledge of the situation who spoke to Reuters on Wednesday.
