Crude has recovered from a steep slump at the start of the year and liquidity is returning to the futures market. A lot of the optimism is because of China, which reported higher mobility with a 120% jump in trips out of the country in the first six days of the Lunar New Year holiday this week compared with last year. It’s bringing some confidence about a rebound in the world’s biggest oil importer after it exited strict Covid restrictions.
The oil market is also starting to indicate signs of tightness after a period of weakness. The prompt spread for global benchmark Brent — the gap between the two nearest contracts — firmed in a bullish backwardation pattern after spending most of the past two months in contango.
“The slow grind higher is continuing,” said Paul Horsnell, head of commodities research at Standard Chartered. “There’s a general positive sentiment. All the ingredients for a gradual grind up to test $90 for Brent” are coming together, he said.
Prices:
- WTI for March delivery rose 1.2% to $81.99 a barrel at 10:36 a.m. in London.
- Prices were 0.9% higher for the week.
- Brent for the same month was 1.2% higher at $88.55.
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