(New York) Oil prices closed with a jump of more than 6% on Tuesday, galvanized by the easing of anti-COVID-19 measures in China, which should support demand, while OPEC warns that it will not be able to compensate for the Russian offer.
Posted at 3:23 p.m.
Updated at 3:32 p.m.
North Sea Brent, Europe’s crude benchmark, rose 6.25% to $104.64 a barrel, while US WTI climbed 6.69%, back above the 100 mark. dollars for the first time in a week, at $100.60.
“The market has been elated that the city of Shanghai is somewhat on its way to being operational again. This will put an end to a strong destruction of oil demand,” Robert Yawger of Mizuho USA told AFP, who estimates that the confinements in the Chinese economic capital remove one million barrels of crude oil per day from global demand.
Shanghai on Monday eased health restrictions in certain neighborhoods following growing dissatisfaction with the very strict confinement which locked 25 million inhabitants in their homes.
This has eased “investor nervousness about the possibility of a slowdown in demand from the world’s second-largest economy,” said Victoria Scholar, an analyst at Interactive Investor.
“I think the market has rebounded far too optimistically on this point,” said Stephen Innes, analyst at SPI Asset Management.
“This change in policy is due to food shortages in large areas and the lack of couriers to deliver the food, […] this is by no means a policy reversal of zero COVID-19,” he asserts.
In addition, the secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Mohammed Barkindo, warned the European Union on Monday that the 7 million barrels per day of Russian exports that would be lost because of the sanctions could not not be fully replaced, reports the financial press.
What maintain fears about the supply of black gold in an already tight market.
“OPEC’s monthly report implies that the organization cannot supplement barrels that have not been produced by Russia,” said Yawger, who said Russian crude production fell by 530,000 barrels. per day for the past month.
Ukrainian President Volodymyr Zelensky reiterated his call for Westerners to impose “a total embargo on Russian hydrocarbons”.