By Peter Nurse
Investing.com -- Oil prices rose Monday on renewed hope that China’s economic reopening will lead to increased demand next year, as well as the news that the Biden administration is set to refill its strategic reserve.
By 09:10 ET (14:10 GMT), U.S. crude futures traded 2% higher at $75.98 a barrel, while the Brent contract rose 1.9% to $80.51 a barrel.
China, the world’s second largest economy and largest importer of crude, is suffering from a spike in COVID cases after its decision to relax several of its mobility restrictions in the wake of public unrest.
However, recent road and air transport metrics show that fuel demand is already picking up, while Chinese authorities have hinted at a more pro-growth stance in the new year.
China's economic output is likely to exceed 120 trillion yuan ($1 = 6.9735 yuan) this year, state media quoted a senior Chinese Communist Party official as saying on Saturday.
This would equate to an approximate 4.9% expansion in gross domestic product from a year earlier, above the 3% growth seen in the first three quarters of the year.
Helping the tone was Friday’s news that the U.S. government is planning to refill its strategic reserves, initially buying 3 million barrels of oil having run the Strategic Petroleum Reserve down to its lowest level in nearly 40 years in a bid to curb rising fuel prices this year.
That said, crude prices are currently trading around their lows this year having given back all of the year’s outsized gains following Russia’s invasion of Ukraine in February on worries that aggressive monetary tightening to combat high inflation will result in a global recession in 2023.
Elsewhere, European Union Energy Ministers are gathering in Brussels on Monday to discuss a proposal to cap natural gas prices, under pressure to agree on a deal after the bloc's heads of government made it a priority at their summit meeting last week.
Bloomberg reported that ministers will debate a new proposal setting the price cap at 180 euros a megawatt-hour, with the cap taking place after only three days of gas futures trading above that price. It would come into effect on February 1st.