Oil prices rose by 4% today as the dollar eased, with an EU ban on Russian oil looming large and investors weighing the prospects for an easing of China's Covid curbs.
Though fears of global recession capped gains, Brent crude futures were up $3.81, or 4.02%, at $98.48 a barrel this afternoon, set for a weekly gain of nearly 3%.
US West Texas Intermediate (WTI) crude futures were up $4.14, or 4.7%, at $92.31 and on course for a weekly gain of 5%.
Both contracts were supported by a weaker dollar, which can boost oil demand because it makes the commodity cheaper for those holding other currencies.
While demand concerns weighed on the market, supply is expected to remain tight because of Europe's planned embargoes on Russian oil and a slide in US crude stockpiles.
"The slight weakness in the dollar, the upcoming ban on Russian oil sales are certainly supportive as focus is shifting from recession fears to supply issues," said PVM Oil Associates analyst Tamas Varga.
"The main catalyst, however, is reports that China may ease its zero-Covid restrictions, which would be a boon to its economy and oil demand," he added.
The EU ban on Russian crude imports is due to take effect from December 5. Details of G7 price capaimed at alleviating constraints on Russian flows outside the EU are still under discussion.
China, meanwhile, is sticking to its strict Covid-19 curbs after cases rose yesterday to their highest level since August, but a former Chinese disease control official said substantial changes to the country's Covid-19 policy are to take place soon.
China's stock markets have been buoyed this week by the rumours of an end to stringent lockdowns despite the lack of any announced changes.
Meanwhile, fears of a recession in the US, the world's biggest oil consumer, grew this week after Federal Reserve Chairman Jerome Powell said it was "very premature" to be thinking about pausing interest rate hikes.
"The spectre of further rate hikes dimmed hopes of a pick-up in demand," ANZ Research analysts said in a note.
The Bank of England also warned yesterday that it thinks Britain has entered a recession and the economy might not grow for another two years.
