Oil prices rise amid eased COVID restrictions in China and tight supply
Oil prices rallied on Tuesday by the demand recovery in the world's second-largest economy with eased tough COVID-19 restrictions in China and doubts over whether OPEC+ producers' higher output target will ease supply tightness.
Last week, the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to increase production by 648,000 barrels per day, or 50% more than previously planned, in July and August.
The increased target spread to all OPEC+ members. However, many members, including Russia, which faces Western sanctions, have little opportunity to increase production. It is unrealistic to expect an increase close to the mentioned figure.
Brent crude futures were up 28 cents, or 0.2%, to 119.79 barrels at 0601 GMT.
West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.3%, to $118.81 a barrel. The benchmark hit a three-month high of $120.99 on Monday.
Beijing and the commercial hub Shanghai have been returning to normal in recent days after two months of painful quarantines to stop outbreaks of the Omicron variant. On Monday, traffic bans were lifted in many parts of Beijing and restaurants opened to serve food.
An increase in fuel demand is expected as vehicles return to the roads in major cities in China and the ports gradually return to normal operation.
Due to concerns about Russian supply disruption, the largest oil exporter, Saudi Arabia increased the July official selling price (OSP) of its flagship Arabian light crude to Asia by $2.10 from June to $6.50 compared to Oman/Dubai prices.
According to surveys, US crude oil inventories fell last week, while gasoline and distillate stocks rose.
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