China getting back to near zero Covid situation has fuelled more demand for oil, and it is starting to show on prices. Image Credit: AFP

Dubai: Oil resumed gains on signs Chinese demand will climb as virus restrictions are eased and Goldman Sachs Group raised its price forecasts.

The West Texas Intermediate futures traded above $119 a barrel, advancing for the fourth session in five. Beijing inched closer to zero Covid cases on Monday as the capital rolled back strict virus curbs. Goldman boosted its quarterly price estimates this year and into 2023, saying that oil needed to rally further to achieve the demand destruction required for market rebalancing.

Oil is up almost 60 per cent this year following a demand rebound from the pandemic and a significant tightening of the market after Russia’s attack on Ukraine. The Bloomberg Spot Commodity Index rose to a record on Monday, mostly driven by natural gas and wheat due to renewed supply fears. “Risks in the market are skewed to the upside,” said Gao Jian, an analyst with Zhaojin Futures Co.. There is optimism about the demand outlook over the northern hemisphere summer, he added.

The war in Ukraine has fanned inflation, boosting the price of everything from food to fuels. The US is grappling with record pump prices at the start of its summer driving season, typically a period of peak demand, while developing nations are suffering from the rising cost of energy.

India is looking to boost its crude imports from Russia, with state-run refiners collectively working on finalizing and securing new six-month supply contracts, said people with knowledge of the plans. Asia’s appetite for cheap Russian oil has contributed to lower demand and plunging values of some US grades.

Goldman said that the market remains in a structural deficit and was even tighter in April than expected, according to a note. The bank increased its third quarter price forecast for global benchmark Brent to $140 a barrel and its estimate for WTI to $137 for the same period.