Oil rallied as Saudi Arabia signaled confidence in the demand outlook with a surprise boost in crude prices, while investors awaited comments on monetary policy from Federal Reserve Chair Jerome Powell.
West Texas Intermediate futures climbed above $75 a barrel, extending a rebound from the lowest since mid-December. Saudi Aramco increased most of its prices for crude that will be shipped to its main market of Asia in March, amid growing optimism over a robust demand recovery in China following the end of Covid Zero.
Monday’s trading saw a host of short-term supply outages, with significant flows disrupted in Turkey and Norway. Crude oil flows to Turkey’s Ceyhan oil terminal will resume shortly, an official with knowledge of the matter said.
The dollar eased on Tuesday, making commodities priced in the currency more attractive to investors, ahead of commentary from Powell that may give clues on the Fed’s rate path.
Oil has fluctuated in a relatively narrow range so far this year, with the global Brent benchmark swinging between about $80 and $90 a barrel. While traders are awaiting more signs of stronger Chinese demand, that has been offset by signs of oversupply in the near term.
Instead of cutting, Saudi Aramco “increased its official selling price for its flagship Arab Light grade to Asia in March, suggesting confidence in the demand outlook,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.
WTI for March delivery gained 2.1% to $75.68 a barrel as of 10:08 a.m. London time.
Brent for April settlement rose 2% to $82.63 a barrel.
There were more strikes across France on Tuesday, with walkouts at the nation’s refineries disrupting fuel deliveries, according to TotalEnergies SE. Last year, French refinery strikes weighed on crude demand and sent refined products markets sharply higher.