The U.S. benchmark oil price rose on Monday evening and early on Tuesday to above $80 per barrel after China announced on Monday a major easing of its Covid travel quarantine rules and after Winter Storm Elliott knocked offline around 1.5 million bpd of refinery capacity in the U.S. Gulf Coast.
As of early morning trade in Europe on Tuesday, WTI Crude was up by 0.80% at $80.19. The international benchmark, Brent Crude, was trading up by 0.85% on the day, at $84.63 per barrel.
Oil prices received a major boost late on Monday and early Tuesday after China said that as of January 8 inbound travelers to China would no longer be subject to mandatory travel quarantine. China is seeing a surge in Covid cases after abandoning other parts of its so-called “zero Covid” policy that was in place for more than two and a half years.
Despite the soaring number of infections and disruption to industries and supply chains, oil demand could be set for a major boost in the world’s top crude oil importer after the initial Covid waves, analysts say. Oil prices have reflected some of that optimism in recent days, although trade is very thin due to the holiday period.
On Tuesday, oil was also supported by refinery closures in the United States due to the severe Winter Storm Elliott. The huge storm swept through Canada and the United States just ahead of the Christmas holiday weekend, bringing freezing temperatures, snow, and icy conditions. Power supply was interrupted in some areas, thousands of flights were canceled, and Christmas travel plans were disrupted.
Hard-freeze warnings were issued for all the states along the U.S. Gulf Coast, where most of the U.S. refining capacity is located.
As of Friday, December 23, as much as 1.5 million bpd of the Gulf Coast’s refining capacity was shut down due to the freezing temperatures, per Reuters estimates.
By Tsvetana Paraskova for Oilprice.com
