By Arathy Somasekhar
HOUSTON -Oil hit a three-week high on Tuesday as China's latest easing of COVID-19 restrictions spurred hopes of a demand recovery, and as production in the United States was hit by winter storms.
Brent crude was up $1.22, or 1.5%, at $85.14 a barrel by 1:07 p.m. EST (1807 GMT) and U.S. West Texas Intermediate crude rose $1.06 to $80.62 per barrel, a 1.3% gain.
Both benchmarks hit their highest level since Dec. 5 earlier in the session. UK and U.S. markets were closed on Monday for the Christmas holiday.
China will stop requiring inbound travellers to go into quarantine, starting Jan. 8, the National Health Commission said on Monday in a major step toward easing curbs on borders that have been largely shut since 2020.
"This is certainly something that traders and investors have been hoping for," Avatrade analyst Naeem Aslam said of China's plan over the quarantine rule.
Meanwhile, frigid cold and blowing winds cut energy production from North Dakota to Texas due to freeze-ins that reduced supplies. Output of about 450,000-500,000 barrels of oil per day was curtailed over Christmas weekend in the Bakken oilfields, the North Dakota Pipeline Authority said.
"The U.S. weather is forecast to improve this week, which means the rally may not last too long," said Kazuhiko Saito, chief analyst at Fujitomi Securities.
Some refineries along the Gulf Coast restarted operations and ramped up production.
Russian President Vladimir Putin on Tuesday also signed a decree that bans the supply of oil and oil products to nations participating in the price cap from Feb. 1 for five months. Concern over a possible production cut by Russia also provided price support.
Russia might cut oil output by 5% to 7% in early 2023 as it responds to price caps, the RIA news agency cited Deputy Prime Minister Alexander Novak as saying on Friday.
