Oil prices are actively rising on Thursday morning, recovering after falling to a three-week low the day before on data on another increase in U.S. fuel inventories.
The price of April futures for Brent on London’s ICE Futures Exchange stood at $83.55 a barrel by 7:05 a.m., $0.71 (0.86%) above the previous session’s closing price. Those contracts fell by $2.62 (3.1%) to $82.84 per barrel at the close of trading on Wednesday.
The price of WTI futures for March at electronic trades of the New York Mercantile Exchange (NYMEX) is $77.17 per barrel by that time, which is $0.76 (0.99%) above the final value of the previous session. The contract fell by $2.46 (3.1%) to $76.41 a barrel at the previous session, its lowest level since January 10.
The day before the US Department of Energy announced that crude stocks in the country grew by 4.14 mln barrels last week. Growth rate has been recorded for six weeks in a row. Analysts polled by Bloomberg expected a decrease in oil reserves by 1 million barrels.
Meanwhile, marketable gasoline reserves rose by 2.58 million barrels and distillates by 2.32 million barrels. Experts had expected gasoline inventories to increase by 2 million barrels and distillate inventories to decrease by 1.5 million barrels.
“The Department of Energy data pointed to an unexpected increase in inventories of all fuels,” said Tariq Zahir, managing partner at Tyche Capital Advisors. The weakness in the oil market may well last, and additional declines will be an opportunity to open long positions, he added.
Also on Wednesday, it became known that the ministers of the monitoring committee of OPEC+ (JMMC), considering the data on production for November and December 2022, recommended not to change the quotas on oil production. The next JMMC meeting is scheduled for April 3, 2023.
In addition, a key event for global markets was the Federal Reserve’s first meeting of the year. The Fed expectedly raised its key interest rate by 25 basis points and said it expects more rate hikes to return inflation to its 2% target.
“Those statements sounded pretty hawkish,” said Tyche Capital’s Zaheer.
Oil prices are rising Wednesday ahead of the release of the results of the Federal Reserve (Fed) meeting as well as the results of the OPEC+ meeting.
The Fed is expected to raise its benchmark rate by 25 basis points (bps) on Wednesday, signaling a further slowdown in the rate hike.
Ministers of the OPEC+ monitoring committee (JMMC) will meet Feb. 1 to discuss the oil market situation. Most experts do not expect any new decisions following this meeting, notes Bloomberg.
The cost of April futures for Brent oil on London’s ICE Futures exchange by 7:15 a.m. on Wednesday is $85.66 per barrel, which is $0.2 (0.23%) higher than the price at the close of the previous session. Those contracts rose $0.96 (1.1%) to $85.46 a barrel at the close of trading on Tuesday.
The price of WTI futures for March increased by $0.32 (0.41%) to $79.19 per barrel at electronic trades of NYMEX. By closing of previous trades the cost of these contracts grew by $0.97 (1.3%) to $78.87 per barrel.
In January both Brent and WTI have fallen in price by about 1.7%. It was the third straight month of decline, despite increased investor optimism about demand prospects in China following the lifting of quarantine restrictions in the country.
“The oil market seems to have found a steady footing,” notes Yep Jun Rong, an analyst at IG Asia Pte in Singapore. – Nevertheless, any hawkish signals from the Fed on Wednesday could bring back downward pressure.”
The American Petroleum Institute (API) data released Tuesday night showed a 6.33 million barrel increase in U.S. oil inventories for the week ended Jan. 27.
The official report on U.S. energy stocks will be released at 5:30 p.m. Wednesday.
Oil prices are moderately lower on Tuesday morning after a sharp decline on Monday, triggered by expectations of interest rate hikes by central banks around the world.
The price of March futures for Brent on London’s ICE Futures Exchange stood at $84.85 a barrel by 7:09 a.m., down $0.05 (0.06%) from the close of the previous session. Those contracts fell $1.76 (2%) to $84.9 a barrel at the close of trading on Monday.
The price of WTI futures for March at electronic trades of the New York Mercantile Exchange (NYMEX) makes $77.54 per barrel by that time, which is $0.36 (0.46%) lower than the final value of the previous session. At the end of last session, the contract fell by $1.78 (2.2%) to $77.98 per barrel.
This week will be the first meetings of the world’s leading central banks – the U.S. Federal Reserve, European Central Bank and Bank of England. The Fed is expected to slow the pace of key rate hikes to 25 basis points from 50 bps in December, and the ECB and Bank of England will again increase borrowing costs by 50 bps.
“A hawkish attitude toward further rate hikes will cause weakness in the oil and oil products market,” StoneX analysts wrote in a letter to clients.
Traders are also trying to take a cautious approach ahead of Wednesday’s next OPEC+ ministerial meeting.
The OPEC+ committee is unlikely to signal any changes in production “given the continued certainty in the market, both on the demand and supply side,” ING strategists Warren Patterson and Ava Manty said.
Oil prices rose on Friday, finishing on the rise for the second week in a row, thanks to investors’ optimism about oil demand in China.
Refining companies in China increase their purchases of oil, hoping for an increase in energy consumption in the country after the lifting of quarantine restrictions, notes Bloomberg.
“Prices are rising amid continued optimism about China’s prospects,” said Charu Chanana, an analyst at Saxo Capital Markets in Singapore. – Signals that the country’s COVID-19 incidence has peaked reinforce expectations for a more sustained rise in demand.”
March Brent crude futures on London’s ICE Futures exchange stood at $86.26 a barrel by 7:15 a.m. Friday, up $0.1 (0.12%) from the previous session’s close. Those contracts rose $1.18 (1.4%) to $86.16 a barrel at the close of trading on Thursday.
The price of WTI futures for February at electronic trades of the New York Mercantile Exchange (NYMEX) increased by that time by $0.17 (0.21%) up to $80.5 per barrel. By closing of previous trades the cost of those contracts grew by $0.85 (1.1%) to $80.33 per barrel.
The previous day the US DOE data showed an unexpected and sharp increase of oil reserves in the USA. The indicator grew by 8.41 mln barrels up to 4483.02 mln barrels while experts interviewed by Bloomberg expected a 3 mln barrel decline of reserves.
Gasoline inventories rose 3.48 million barrels, compared to an expected increase of 2.4 million barrels.
“The inventory data was significantly different from what the market was expecting,” said Tyche Capital Advisors expert Tariq Zahir. – Nevertheless, we expect prices to rise further given the opening of the Chinese economy, the situation in Ukraine (Russia’s full-scale war against Ukraine – IF) and the fact that the US government needs to replenish the strategic oil reserve.”
Oil is cheapening fast on Thursday morning after declining the day before. Investors are evaluating signals about increase of fuel reserves in the USA and statements of representatives of the Federal Reserve.
The cost of March futures on the Brent crude at London’s ICE Futures Exchange stood at $83.83 per barrel by 7:16 a.m., down $1.15 (1.35%) from the close of the previous session. At the close of trading on Wednesday those contracts fell by $0.94 (1.1%) to $84.98 per barrel.
The price of WTI futures for February at the electronic trading on the New York Mercantile Exchange (NYMEX) is $78.2 per barrel by that time, which is $1.28 (1.61%) lower than at the end of the previous session. The contract fell by $0.7 (0.9%) to $79.48 per barrel at the end of last session.
The day before oil had had a volatile session: during the trading quotations reached new highs since early December, but then went down on statements of James Ballard, head of Federal Reserve Bank of St. Louis.
Ballard told The Wall Street Journal that the U.S. central bank should continue raising the benchmark interest rate in order to get inflationary pressures down, despite recent statistical data pointing to a slowing economy.
“Such words have heightened fears that the Fed could raise the rate again by 50 basis points at its next meeting,” said Phil Flynn, senior market analyst at The Price Futures Group.
Moreover, the American Petroleum Institute (API) data, released Thursday night, showed a 7.6 million-barrel increase in U.S. oil inventories last week. A week earlier, reserves rose 14.87 million barrels.
The official report of the U.S. Department of Energy will be released Thursday at 6:00 p.m., a day later than usual due to the Martin Luther King Day holiday on Monday. Analysts polled by WSJ forecast that oil reserves fell by 1.1 million barrels for the week ended Jan. 13. The survey was conducted before the API data was released.
Oil prices are rising in trading on Wednesday amid continuing hopes for a rebound in demand from China after the removal of anti-coveting restrictions.
The cost of March futures on London’s ICE Futures Exchange is $86.56 per barrel by 7:13 a.m. (EET), which is $0.64 (0.74%) above the previous session’s closing price. At the close of trading on Tuesday those contracts grew by $1.46 (1.73%) to $85.92 per barrel.
The price of WTI futures for February at electronic trades of the New York Mercantile Exchange (NYMEX) is $80.83 per barrel by that time, which is $0.65 (0.81%) above the final value of the previous session. At the end of trading on Tuesday the contract grew by $0.32 (0.4%) up to $80.18 per barrel.
China’s Vice Premier Liu He announced at the World Economic Forum in Davos that China was open for global cooperation after three years of isolation caused by the COVID-19 pandemic. According to him, the peak of the coronavirus infection in the country and the economic recovery came earlier than the government expected.
China’s economy reportedly expanded by 2.9% in the fourth quarter of 2022 compared to the same period last year, according to data from the State Statistics Office (SSO). Thus, the growth rate slowed significantly from 3.9% in the third quarter.
Meanwhile, the figure exceeded analysts’ expectations, who on average predicted a 1.8% increase in Chinese GDP in October-December, Trading Economics reported.
OPEC improved its estimate of global oil demand in the first quarter of 2023 by 160,000 bpd from its previous forecast to 101.04 million bpd, the cartel’s monthly report showed.
“Slight upward adjustments were made due to an expected improvement in China’s economic performance amid its re-emerging from COVID-19 restrictions, while other regions are expected to see slight declines due to economic problems that are likely to affect oil demand,” the report said.
Meanwhile, forecasts for 2022 and 2023 remained unchanged at 99.55 million bpd and 101.77 million bpd, respectively.
Traders are now waiting for the International Energy Agency’s (IEA) monthly survey, which will be released Wednesday.
