Oil at $120, opens week with rise in Asia

Oil has risen to near $120 a barrel Monday as China eased its anti-virus lockdowns and the EU worked on a plan to ban imports of Russian crude.

The international benchmark crude grade Brent had topped $120 a barrel, then pared some gains, after the benchmark jumped more than 6% last week to post the highest close in two months.

The key hub of Shanghai, China’s commercial capital allowed all manufacturers to resume operations from June, while officials said Beijing’s coronavirus outbreak is under control.

A research note by Goldman Sachs said Shanghai offered tax rebates for companies and allowed all manufacturers to resume operations from June as authorities rolled out scores of policies to revitalize an economy impacted by Covid lockdowns.

The financial hub will accelerate approvals for property projects and supply new residential developments, according to a plan issued by the Shanghai municipal government.

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Traders believe oil is heading for its sixth monthly gain, the longest winning streak since April 2011 as Russia’s war in Ukraine continues to ripple through the market.

Cautious optimism about China’s easing coronavirus restrictions and the start of the US driving season has added bullish sentiment to the demand outlook. Futures are up around 10% so far this month.

Meantime, European Union nations failed to agree on a deal Sunday on a revised package of sanctions over Moscow’s invasion of Ukraine ahead of a leaders’ summit in Brussels but talks will continue during the week.

Hungary is so far refusing to back a compromise despite proposals aimed at ensuring its Russian oil supplies, according to people familiar with the talks. Some European Union leaders are leaning toward a deal that would ban seaborne oil while temporarily sparing deliveries through a key pipeline to give landlocked Hungary more time.