By Isabel Kua

SINGAPORE, (Reuters) – Oil prices rose on Tuesday due to the expected recovery of demand in China. China relaxed strict COVID restrictions and this raised doubts about whether OPEC+ would increase its output targets.

Futures rose 19 cents or 0.2% to $119.70 per barrel at 0050 GMT.

U.S. West Texas Intermediate crude oil futures rose 25 cents or 0.2% to $118.75 per barrel. On Monday, the benchmark reached a 3-month peak of $120.99

According to ANZ Research, the removal of travel restrictions from China is expected to increase demand for oil over the next weeks.

Since two months of suffering lockdowns due to the Omicron strain, Beijing has been reopening its commercial center Shanghai. In most areas of Beijing, traffic bans have been lifted. On Monday, dine-in restaurants opened.

Saudi Arabia is the world’s largest oil exporter. The July OSP for their flagship Arab light crude was raised by $2.10 to $6.50 from June. That premium comes at a slight discount of Oman/Dubai rates.

The Organization of the Petroleum Exporting Countries (OPEC+) and its allies decided last week to increase July and August’s production by 648,000 barrels/day, which is 50% more than was previously planned.

All OPEC+ member countries received the increased target. Many members, such as Russia, have limited capacity to increase their output due to Western sanctions.

Stephen Innes, managing director at SPI Asset Management stated in a note that “new increased monthly targets continue be driven by proportional contributors from all participants (including Russia) but it is unrealistic for an increase close to this headline figure.”

According to preliminary Reuters poll, inventories are likely to have fallen last week. However, gasoline and distillate stocks were up.