- Oil extends gains amid renewed hope for Chinese demand, but the surge in COVID cases may limit gains
- WTI rose by nearly 60c this morning to trade above $75/Bbl
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of six international currencies) marginally weakened relative to its recent highs
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- Despite China’s pledge to boost consumption, uncertainty over the impact of an uptick in COVID-19 cases in China, the world's largest oil importer, may affect near-term demand
- Beijing reported five more deaths on Tuesday as authorities rushed to add hospital beds and fever clinics to curb the potential spike in Covid cases
- Furthermore, US State Department expressed concerns yesterday regarding new Chinese Covid-19 mutations as they mark a threat to “people everywhere”
- Additionally, PHMSA said that TC Energy’s restart plan for the 0.622 MMBbl/d Keystone pipeline is still under review
- Russia’s pipeline operator Transneft claims that Germany and Poland have ordered more Russian oil to be delivered in 2023 (BBG)
- However, Germany today reiterated its plan to end all purchases of Russian crude oil through 2023 after Transneft CEO Nikolay Tokarev claimed that Germany and Poland had applied for Urals in 1Q2023
- According to a German spokesperson, reports of orders for Russian crude are "false," and Schwedt and Leuna oil companies "will no longer order" Urals in 2023