- Oil futures rise slightly after falling more than 3% in last session
- G7 price cap on Russian oil goes into effect
- China set to further ease COVID controls
Dec 6 (Reuters) – Oil rebounded on Tuesday after plunging more than 3% in the previous session as the implementation of sanctions on Russian maritime crude eased concerns over oversupply while the easing of COVID restrictions in China has bolstered the demand outlook.
Brent crude futures had gained 85 cents to $83.53 a barrel by 0733 GMT. West Texas Intermediate (WTI) crude rose 68 cents to $77.62 a barrel.
Crude futures posted their biggest daily decline in two weeks on Monday, after data from the U.S. services sector raised concerns that the Federal Reserve might continue its aggressive course of policy tightening.
The Group of Seven has set a maximum price of $60 a barrel for Russian crude, in an effort to limit Moscow’s ability to finance its war in Ukraine, but Russia has said it will not abide by the measure even if it had to reduce its production.
The price cap, to be enforced by G7 countries, the European Union and Australia, comes on top of the EU embargo on imports of Russian crude by sea and similar state pledges United States, Canada, Japan and Great Britain.
As the market weighs the impact of sanctions on Russian supplies, it was also watching a tanker jam off the Turkish coast on Monday, with Ankara insisting on new proof of insurance for all vessels.
“The threat of losing Protection and Indemnity (P&I) insurance will limit Russia’s access to the tanker market, reducing crude exports to 2.4 million barrels per day (bpd) – 500,000 bpd less than levels seen prior to Russia’s invasion of Ukraine in late February this year,” Rystad Energy analysts said in a note.
In China, more cities are easing COVID-19 restrictions, prompting optimism about increased demand from the world’s top oil importer.
The country is set to announce further easing of some of the world’s toughest COVID curbs as early as Wednesday, sources said.
Trade and manufacturing activity in China, the world’s second-largest economy, has been hit this year by strict measures aimed at curbing the spread of the coronavirus.
But oil price gains could prove fragile as it would take time to confirm a sustained recovery in Chinese consumption, as well as the supply impact of Russian sanctions.
Saudi Arabia, the world’s top oil exporter, lowered the official January sale price of its flagship Arab Light crude for Asian buyers to its lowest level in 10 months.
Reporting by Stephanie Kelly; Editing by Bradley Perrett and Edmund Klamann
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