Aug 26, 2021 (Baystreet.ca via COMTEX) -- After taking a beating over the past few weeks, oil prices have been surging on rising demand optimism, a major production outage in Mexico, and the first full U.S. regulatory approval of a COVID-19 vaccine.
October crude and Brent were up 3% to $67.47/bbl and $70.83/bbl, respectively, a day after a 5% surge by both benchmarks snapped a seven-day losing streak after China claimed to have brought its coronavirus cases down to zero and opened up the Ningbo port, one of the busiest in the world, after a two-week shutdown.
About two weeks ago, China--once the epicenter of the virus--took an uncompromising approach by imposing widespread travel restrictions and new lockdowns. Authorities in Beijing curtailed public transport and taxi services in 144 of the worst-hit areas nationwide, including train service and subway usage in Beijing.
That seemed like overkill, with less than 1,000 cases of the delta virus reported nationwide and a good 61% of the population already fully vaccinated. However, Beijing opted to employ its tried-and-tested method of targeted lockdown that has been successful in stopping no less than 30 Covid-19 flare-ups in the past. The capital city of Beijing implemented a two-week quarantine for visitors from high-risk areas, halted the use of community spaces for entertainment, and also limited the number of visitors allowed at parks and scenic areas.
Chinese authorities also urged people to cancel vacations and business trips, especially those from high-risk areas, and also advised college students to delay their return to school for the new semester.
Well, it appears that Beijing has come out on top, once again.
"The developments out of China are reigniting expectations that oil demand would start to rise again," said Phil Flynn, senior market analyst at Price Futures Group Inc. has told Bloomberg.
Meanwhile, a major fire on a Mexican oil platform has wiped out more than 400,000 barrels a day of the nation's output, a development that has calmed nerves with OPEC+ expected to add a similar amount to the market beginning September.
Bullish for commodities
The latest oil price rally also comes with further signals that demand is strengthening.