Oil prices increase as China's resurgence and the U.S. repurchase programme improve prospects

The likelihood of a demand recovery, driven by China's relaxation of COVID-19 restrictions and the United States' intention to purchase back oil for its state reserves, outweighed concerns about a worldwide recession on Monday.

By 0458 GMT, Brent crude futures were up 74 cents, or 0.9%, to $79.78 per barrel, while U.S. West Texas Intermediate crude was up 74 cents, or 1%, to $75.03 per barrel.

Following hawkish comments from the U.S. and European central banks on interest rate hikes that stoked concerns about a potential recession, both benchmarks fell by more than $2 a barrel on Friday.

Following Beijing's relaxation of movement restrictions, China, the world's biggest importer of crude oil and second-largest oil consumer, is currently suffering the first of three anticipated waves of COVID-19 instances.

Despite an increase in COVID cases, the prognosis for oil demand is improved by reopening optimism and accommodating policies, according to CMC Markets analyst Tina Teng.

According to satellite data company Kayrros, the abrupt end of China's "dynamic zero" COVID policy is reviving the country's faltering aviation industry. Demand for jet fuel has increased on average by 75%, or roughly 170,000 barrels per day, in just two weeks.

China intends to increase flights, according to Friday's report from the news source Caixin, with the aim of bringing the nation's average daily passenger travel volumes back to 2019 levels by January 6.

"The market will pay close attention to how well China's demand is picking up.

Generally speaking, things are looking up, but given the dire COVID scenario in the near future, the road to recovery could be rocky and slow "Haitong Futures experts stated.

At a two-day meeting for setting the direction of the economy in 2023, China's top leaders and policymakers also vowed to concentrate on stabilising its $17 trillion economy and step up policy adjustments to guarantee important targets are met.

"Fiscal stimulus and monetary policies that are stable will be the major growth-promoting measures. Next year, we anticipate a fiscal deficit of roughly 8% of GDP "said Iris Pang, ING Bank's Greater China chief economist.

The prognosis for higher prices was further encouraged by the U.S. Energy Department's Friday statement that it will start repurchasing crude oil for the Strategic Petroleum Reserve for delivery in February of next year.

The 180 million barrel release from the stockpile earlier this year set a record, and this will be the first purchase by the US since then.