Oil futures rose Monday, building on last week’s gains, as investors remained optimistic over the outlook for crude demand from China following the country’s relaxation of COVID-19 curbs.

Price action
  • West Texas Intermediate crude for March delivery


    rose 55 cents, or 0.7%, to $82.19 a barrel on the New York Mercantile Exchange.

  • March Brent crude

    the global benchmark, gained 71 cents, or 0.8%, to $88.34 a barrel on ICE Futures Europe.

  • Back on Nymex, February gasoline
    rose 0.3% to $2.654 a gallon, while February heating oil
    was up 1.2% at $3.509 a gallon.

  • February natural gas
    jumped 9.3% to $3.469 per million British thermal units, while March natural gas

    the most actively traded contract, was up 3.1% at $3.129 per million Btus.

Market drivers

Oil pushed higher Monday, following through to the upside after a second straight weekly gain. Growing optimism over the global economic outlook, with the Federal Reserve seen slowing rate hikes in 2023 as inflation slows, has also provided a boost, analysts said.

“Oil prices are trading higher on diminishing recession risks while easing inflation pressure suggests the days of outsized hikes are behind us, broadly supporting risky assets and providing a slight tailwind for currency markets,” said Stephen Innes, managing director at SPI Asset Management, in a note.

“But China’s reopening is the game changer for oil markets, and oil prices will likely fly, especially if international travel continues to open up,” he wrote. “In addition, looking at price action today and the rush for top-side exposure in London suggests traders have yet to fully price the Chinese consumer boost at the pump or the expected downturn in Russian production.”

A price cap on Russian oil products agreed by the U.S. and its allies is set to take effct on Feb. 5, alongside an existing cap on Russian crude oil prices. The group is due to review the cap on crude pirces in March, the U.S. Treasury Department said Friday.