Oil surges as China cuts COVID restrictions, raising hopes for demand boost

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Crude oil prices surged as much as 4% Friday after China eased some of its COVID rules, raising hopes the moves might ultimately boost economic activity and demand in the world's top crude importer.

U.S. WTI crude (CL1:COM) for December delivery +3.9% to $89.87/bbl, extending a 1.1% rise in the previous session, and January Brent crude (CO1:COM) +3.3% to $96.76/bbl, after adding 0.8% in the prior session.

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Among stocks showing strong early gains: Transocean (RIG) +10.1%, Tellurian (TELL) +9%, CVR Energy (CVI) +8.1%, W&T Offshore (WTI) +7.4%, Laredo Petroleum (LPI) +7.3%, SM Energy (SM) +6.9%, Ovintiv (OVV) +6.2%, Devon Energy (DVN) +5.5%, Occidental Petroleum (OXY) +5%, Matador Resources (MTDR) +4.9%, Murphy Oil (MUR) +4.8%, APA Corp (APA) +4.1%, Marathon Oil (MRO) +4%.

"The first small steps towards easing of the regulations that were announced by the Chinese government this morning allowed oil prices to climb again, even though this by no means constitutes a departure from the country's strict zero-COVID policy, in our opinion," Commerzbank analysts said, according to Reuters.

Bloomberg reported Saudi energy minister Prince Abdulaziz bin Salman said OPEC+ will remain cautious on oil production, noting that members saw "uncertainties" in the global economy ahead of the group's next meeting in December, weeks after OPEC+ angered the U.S. by cutting crude output by a larger than expected 2M bbl/day.