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Brent crude futures rose $1.16, or 1.4%, to a two-and-a-half
month high of $85.63 a barrel at 1125 GMT. U.S. West Texas
Intermediate crude gained $1.06, or 1.3%, to $83.18.
Crude prices turned positive as the dollar headed towards what
could be its largest weekly fall in more than a year. A weaker
dollar makes commodities more affordable for holders of other
currencies. [FRX/]
Several banks have forecast oil prices of $100 a barrel this
year, with demand expected to outstrip supply, not least as
capacity constraints among OPEC+ countries come into focus.
"When you consider that OPEC+ is still nowhere near pumping to
its overall quota, this narrowing cushion could turn out to be
the most bullish factor for oil prices over the coming months,"
said PVM analyst Stephen Brennock.
However, sources told Reuters that China plans to release oil
reserves around the Lunar New Year holidays between Jan. 31 and
Feb. 6 as part of a plan coordinated by the United States with
other major consumers to reduce global prices.
The U.S. Energy Department on Thursday said it had sold 18
million barrels of strategic crude oil.
China has also posted its first annual decline in crude oil
imports in two decades, though traders expect imports to recover
this year.
There were also concerns about fuel demand in the world's
second-biggest oil consumer as the Omicron coronavirus variant
spread to the cities of Dalian and Tianjin.
Many cities, including Beijing, have urged people not to travel
during the Lunar New Year holiday, which could cool demand.
(Reporting by Shadia Nasralla; Additional reporting by Florence
Tan; Editing by David Goodman and Jason Neely)
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