LONDON, Nov 25 (Reuters) – Oil prices rose on Friday on tight market liquidity, ending a week marred by concerns over Chinese demand and talks over a Western price ceiling for Russian oil.
Brent crude futures were up 92 cents, or 1.1%, to trade $86.26 a barrel at 1:25 pm GMT.
US West Texas Intermediate (WTI) crude futures rose $1.27, or 1.6%, to $79.21 a barrel. There was no WTI settlement on Thursday due to the US Thanksgiving holiday and trading volumes remained low.
Both contracts were still heading for their third consecutive weekly decline after hitting 10-month lows this week.
The structure of the Brent market implies that current demand is weak, with backwardation, defined by first month prices trading above contracts for later delivery, which have weakened significantly in recent sessions.
For the two-month spread, the Brent structure even dropped in contango this week, implying oversupply with short-term delivery contracts priced below subsequent deliveries.
China, the world’s top oil importer, reported a new daily record of COVID-19 infections on Friday, as cities across the country continued to enforce mobility measures and other limits to control outbreaks.
This is starting to hit fuel demand, with traffic falling and implied oil demand about 1 million bpd below average, an ANZ note showed.
Meanwhile, diplomats from the G7 and the European Union have discussed a maximum price for Russian oil of between $65 and $70 a barrel, but no deal has yet been reached.
The goal is to cap revenues to fund Moscow’s military offensive in Ukraine without disrupting global oil markets, but the proposed level is broadly in line with what Asian buyers are already paying.
Negotiations are expected to remain cautious ahead of a price cap deal, which is expected to take effect on December 5, when an EU ban on Russian crude kicks in, and ahead of the next meeting of the Organization of the Petroleum Exporting Countries and allies on 4 December.
Additional reporting by Sonali Paul in Melbourne and Trixie Yap in Singapore Editing by Mark Potter
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