OIL GAINS ON SUPPLY CONCERNS

OIL PRICES rose by more than $2 yesterday on signs of tighter supply, a weaker dollar and optimism over a Chinese demand recovery.

But the likelihood that Opec+ will leave output unchanged at its upcoming meeting limited the gains.

Brent crude futures climbed $2.34, or 2.82% to $85.37 (about R1 453) a barrel by 4.55pm. The more active February Brent crude contract rose by 3.04% to $86.81 a barrel.

US West Texas Intermediate (WTI) crude futures climbed $2.43, or 3.11%, to $80.63 a barrel.

US crude oil stocks dropped by 7.9 million barrels in the week ended November 25, according to market sources citing American Petroleum Institute figures on Tuesday.

Official figures are due from the US Energy Information Administration tomorrow.

And the International Energy Agency expects Russian crude production to be curtailed by some 2 million barrels of oil a day by the end of the first quarter next year, its chief Fatih Birol told Reuters on Tuesday.

Russia would not supply oil to countries imposing a price cap, Russia’s foreign ministry spokeswoman Maria Zakharova said.

On the demand side, further support came from optimism over a demand recovery in China, the world’s largest crude buyer.

China reported fewer Covid-19 infections than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.

Guangzhou, a southern city, relaxed Covid prevention rules in several districts yesterday.

A fall in the dollar was also bullish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies, and boosts demand.

Fed chairperson Jerome Powell is scheduled to speak about the economy and labour market tonight.