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Oil futures rose Tuesday, looking to build on an October gain, as the U.S. dollar pulled back and unconfirmed rumors circulated that China may ease COVID curbs.
Price action
-
West Texas Intermediate crude for December delivery
CL.1,
+2.87% CLZ22,
+2.87%
rose $1.16, or 1.3%, to $87.69 a barrel on the New York Mercantile Exchange. -
January Brent crude
BRN00,
+2.59% BRNF23,
+2.59% ,
the global benchmark, was up $1.18, or 1.3%, at $93.99 a barrel on ICE Futures Europe. -
Back on Nymex, December gasoline
RBZ22,
+2.87%
rose 1.4% to $2.561 a gallon, while December heating oil
HOZ22,
+0.50%
ticked up 0.2% at $3.683 a gallon. -
December natural gas
NGZ22,
-5.73%
pulled back 2.1% to $6.22 per million British thermal units after jumping more than 10% on Monday.
Market drivers
The Wall Street Journal reported Tuesday that Hong Kong stocks appeared to be rallying after an anonymous post on Chinese social media suggested that the government may intend to soften pandemic-related restrictions beginning in March. Other outlets also reported on the rumor.
See: Alibaba and Nio among Chinese stocks surging as hopes build about potential reopening
China’s COVID restrictions have been seen as a lid on oil prices, limiting demand for crude from one of the world’s largest energy consumers.
WTI rose 8.9% in October, based on front-month contracts, while Brent gained 7.8%, with some support attributed to a decision by the Organization of the Petroleum Exporting Countries and its Russia-led allies, a combo known as OPEC+, to cut output by 2 million barrels a day beginning in November. The actual cut is expected to be around half that given that several members were already producing below their targets.
“Clearly, announced OPEC+ supply cuts have stabilized the oil market to a certain extent. However, how stabilizing this action will be in the medium to long term will really depend on the full impact of the EU’s ban on Russian oil,” which comes into effect on Dec. 5 for crude oil and Feb. 5 for refined products, said Warren Patterson, head of commodities strategy at ING, in a note.
The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, was down 0.6%. The dollar’s sharp rise in 2022 has also been seen as an obstacle for oil bulls. A stronger dollar makes commodities priced in the unit more expensive to users of other currencies.
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