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Crude also gained support from dollar weakness prompted by euro
zone factory data and the Federal Reserve Chair saying the pace
of U.S. interest rate hikes could be scaled back.
A weaker dollar makes oil cheaper for other currency holders and
tends to support risk assets.
The Organization of the Petroleum Exporting Countries (OPEC) and
allies including Russia, a group known as OPEC+, meets on Dec.
4. Though sources said on Wednesday that a policy change is
unlikely, some feel that a further cut cannot be ruled out.
"I believe the OPEC+ meeting forces shorts to cover, but the
consensus is unchanged quota levels," said Tamas Varga, of oil
broker PVM.
"Perceived easing of Chinese COVID restrictions, favourable
factory data from the euro zone and the resultant dollar
weakness provide continuous price support."
Brent crude was up 94 cents, or 1.1%, at $87.91 a barrel by 1250
GMT while U.S. West Texas Intermediate crude futures added
$1.18, or 1.5%, to $81.73.
The apparent shift in China's zero-COVID strategy raises
optimism over a Chinese oil demand recovery. The cities of
Guangzhou and Chongqing announced an easing of COVID curbs on
Wednesday.
"The signals coming from China also look very positive," said
Craig Erlam of brokerage OANDA. "Any modest softening in its
COVID-zero policy will and should be welcomed."
Both oil benchmarks have posted three consecutive weekly
declines,lthough the market has rebounded strongly this week
after hitting its lowest in nearly a year on Monday. Brent
touched $80.61, its lowest since Jan. 4.
The prospect of a lower price cap on Russian oil is also lending
support, analysts said. European Union countries are edging
towards a deal on the price cap ahead of a Dec. 5 deadline.
A slide in U.S. crude inventories in weekly data also
underpinned the price rally. [EIA/S]
(Additional reporting by Jeslyn Lerh in SingaporeEditing by
Kirsten Donovan and David Goodman)
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