Crude was also supported by dollar weakness prompted by euro zone factory data and the Federal Reserve Chairman said the pace of US interest rate hikes could be reduced.
A weaker dollar makes oil cheaper for other currency holders and tends to support risky assets.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a group known as OPEC+, meet on December 4. Although sources said Wednesday that a change in policy was unlikely, some say a further cut cannot be ruled out.
“I think the OPEC+ meeting is forcing shorts to hedge, but the consensus is that quota levels remain unchanged,” said Tamas Varga of oil broker PVM.
“The perceived easing of China’s COVID-related restrictions, favorable Eurozone factory data and resulting dollar weakness provide continued price support.”
Brent crude rose 94 cents, or 1.1%, to $87.91 a barrel at 12:50 GMT while US West Texas Intermediate crude futures added $1.18, or 1, 5%, to $81.73.
The apparent shift in China’s zero-COVID strategy is raising optimism about a recovery in Chinese oil demand. The cities of Guangzhou and Chongqing announced an easing of COVID restrictions on Wednesday.
“Signals from China also look very positive,” said Craig Erlam of brokerage OANDA. “Any modest relaxation of its COVID-zero policy will and should be welcome.”
Both oil benchmarks have posted three consecutive weekly declines, although the market has rebounded strongly this week after hitting its lowest in nearly a year on Monday. Brent touched $80.61, its lowest since Jan. 4.
The prospect of a lower Russian oil price cap is also providing support, analysts said. European Union countries are moving towards a price cap agreement before the December 5 deadline.
A drop in U.S. crude inventories in weekly data also supported the rise in prices. [EIA/S]
