(Bloomberg) -- Oil climbed on optimism that China's reemergence from Covid Zero will aid demand, with traders looking for fresh clues on the outlook as the nation's financial markets reopen after the week-long Lunar New Year break.
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West Texas Intermediate advanced above $80 a barrel, after shedding 2% last week as concerns of a US economic slowdown flared. China's reopening is spurring mobility, with domestic tourism at almost 90% of pre-pandemic levels, aiding energy demand in the world's top oil importer.
Crude traders are also on the lookout for any fallout from the European Union's impending ban on seaborne imports of Russian oil products. The measures start in about a week, along with price caps similar to the mechanism imposed on the nation's crude amid the nearly yearlong war Moscow is waging in Ukraine.
Oil remains little changed so far this year after a bumpy ride that's seen prices supported by the outlook for demand in China but held back by concerns about a potential US recession. While the Federal Reserve is expected to deliver another rate increase this week, some investors believe that the central bank is now nearing the end of its tightening cycle, which has hurt the dollar.
"China's reopening is hardly being priced in to the oil market, yet," RBC Capital Markets LLC analysts including Michael Tran said in a note, forecasting WTI may average $92 a barrel this year. "We would not be the least bit surprised if the lows of the year end up being the $72-a-barrel print that we saw three weeks ago, on the second trading day of the year."
China's State Council said the nation needs to accelerate a recovery in consumption and make it the economy's main driving force, state media CCTV reported on Saturday, citing a meeting chaired by Premier Li Keqiang.
Time spreads are signaling renewed strength in the market, with the prompt spread for global benchmark Brent - the gap between its two nearest contracts - holding in a bullish backwardated structure, compared with the contango seen over most of the previous two months.
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