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China announced on Wednesday the most sweeping changes to its
anti-COVID regime since the pandemic began, loosening rules that
curbed the spread of the virus but hobbled the world's second
largest economy and sparked protests.
Brent crude was up 7 cents at $79.42 a barrel by 1230 GMT. It
touched $77.74 earlier, the lowest since Jan. 3. U.S. crude
added 28 cents, or 0.4%, to $74.53 and earlier touched $72.75,
the lowest since late December.
"There's still tons of uncertainty in the markets today," said
Claudio Galimberti, senior vice-president at Rystad Energy,
adding crude production in Russia may not drop as much as
expected earlier.
The reopening in China could see a 1% boost to global oil
demand, ANZ bank said in a client note.
Still, warnings from big U.S. banks about a likely recession
next year weighed, and supported the U.S. dollar. A stronger
dollar makes oil more expensive for holders of other currencies
and tends to dampen appetite for risk assets.
Brent settled below $80 on Tuesday for the only the second time
in 2022 and has unwound the year's gains, which had lifted
prices close to the all-time high of $147 in March after Russia
invaded Ukraine.
Fears were easing that the price cap on Russian crude could
cause a supply shock. Russia, the Vedomosti daily reported on
Wednesday, is considering options including banning oil sales to
some countries to counter the cap imposed by Western powers.
"The geopolitical risk premium has all but disappeared, but
inflation concerns have not," oil broker PVM said. "Clearly,
investors are not worried the least about any potential supply
shortage that might be the result of the price cap and the EU
ban on Russian oil sales."
Also lending support was Tuesday's report from industry group
the American Petroleum Institute which, according to market
sources, said that crude stocks fell by around 6.4 million
barrels.
In focus is the latest U.S. supply report from the Energy
Information Administration due at 1530 GMT and whether it
confirms the large decline in crude stocks. [EIA/S]
(Additional reporting Trixie Yap in Singapore, editing by Jason
Neely and Louise Heavens)
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