West Texas Intermediate futures gained 3% on Friday morning in the wake of growing optimism over China’s economy as the government considers the easing of Covid restrictions. Following the spread of rumors on social media about the potential curbing of Covid measures in China, the price of oil rose above $90 per barrel.
Another cause for investors’ surge in optimism comes as a result of rumors about the Chinese government also ending its system that penalizes airlines that bring Covid cases into the country. Currently, China is the world’s biggest crude importer.
In accordance with China’s Zero Covid policy, mass lockdowns and tests are conducted nationwide in order to eliminate the virus in its entirety. The Bank of China International Ltd. estimates that such measures have led to a decline in the country’s oil demand by 400,000 barrels per day.
Stephen Innes, the managing partner at SPI Asset Management, commented that investors will be eager to not miss out on the reopening of Chinese markets, hence the surge in confidence. “The market senses something is on the go here, thinking where there is smoke, there is fire,” Innes reflected.
Oil prices have fluctuated significantly as of late, particularly in the midst of a tightening supply amid OPEC+’s decision to curb production in November.