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The
rally was part of a wider boost for risk sentiment supported by
both the reopening of the world's biggest crude importer and
hopes for less-aggressive increases to U.S. interest rates, with
equities rising and the dollar weakening.
Brent crude was up $2.29, or 2.9%, at $80.86 a barrel by 1150
GMT while U.S. West Texas Intermediate crude rose $2.46, or
3.3%, to $76.23.
"If recession is avoided, global oil demand and demand growth
will remain resilient," said Tamas Varga of oil broker PVM,
adding that developments in China were the main reason for
Monday's gains.
"The gradual reopening of the Chinese economy will provide an
additional and immeasurable layer of price support," he said.
The rally followed a drop last week of more than 8% for both oil
benchmarks, their biggest weekly declines at the start of a year
since 2016.
As part of a "new phase" in the fight against COVID-19, China
opened its borders over the weekend for the first time in three
years. Domestically, about 2 billion trips are expected during
the Lunar New Year season, nearly double last year's and 70% of
2019 levels, Beijing says.
In oil-specific developments, China issued a second batch of
2023 crude import quotas, according to sources and documents
reviewed by Reuters, raising the total for this year by 20% from
the same time last year.
Despite Monday's oil rebound, there is still concern that the
massive flow of Chinese travellers could cause another surge in
COVID infections while broader economic concerns also linger.
Those concerns are reflected in oil's market structure. Both the
near-term Brent and U.S. crude contracts are trading at a
discount to the next month, a structure known as contango, which
typically indicates bearish sentiment.
(Reporting by Alex LawlerAdditional reporting by Florence Tan
and Jeslyn LerhEditing by David Goodman)
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