Oil prices are falling slightly on Wednesday after a strong rise in the previous session.
The market rise on Tuesday was promoted by the forecasts of a cold snap in the USA and also by the weakening of the dollar after the publication of the statistical data, which showed a slowdown in inflation in the states in November.
In addition, the market continues to be supported by the situation with the Keystone pipeline, which was closed last week, and expectations of increased demand in China as a result of the easing of quarantine restrictions, Market Watch said.
The cost of February futures for Brent crude oil on London’s ICE Futures Exchange was $80.51 a barrel by 7:10 a.m. KSC on Wednesday, down $0.17 (0.21%) from the previous session’s closing price. Those contracts rose $2.69 (3.5%) to $80.68 a barrel at the close of trading on Monday.
The price of WTI futures for January oil fell by $0.11 (0.15%) to $75.28 per barrel at electronic trades of New York Mercantile Exchange (NYMEX) by that time. By the close of previous trading the cost of these contracts increased by $2.22 (3%) to $75.39 a barrel.
Canada’s TC Energy, the operator of Keystone, plans to partially open the pipeline Wednesday and fully return it to service Dec. 20, Bloomberg reported, citing sources.
The focus for traders Wednesday is last week’s U.S. energy inventory data, to be released by the Energy Department at 5:30 p.m. CSC.
American Petroleum Institute (API) data released the day before showed a 7.819 million barrel increase in U.S. oil inventories for the week ended Dec. 9.
Oil prices rose for the second consecutive session on expectations of increased demand in China as a result of easing quarantine restrictions while supply in the market decreased due to the closure of the Keystone oil pipeline.
Canada’s TC Energy, which suspended operation of the pipeline last week, is troubleshooting the issues and has not yet presented a plan to bring Keystone back online.
The shutdown of the pipeline, which connects oil fields in southern Canada and refineries in the U.S. Gulf Coast, reduced global supply by 600,000 barrels per day (bpd), while “the supply-demand balance there was already weak,” said Manish Raj, chief financial officer of Velandera Energy Partners, cited by Market Watch.
The price of February futures for Brent crude oil on London’s ICE Futures exchange is $79.12 a barrel by 7:10 a.m. CST on Tuesday, up $1.13 (1.45%) from the previous session’s close. Those contracts rose $1.89 (2.5%) to $77.99 a barrel at the close of trading on Monday.
The price of WTI futures for January oil grew by $1.01 (1.38%) to $74.18 per barrel at electronic trades of New York Mercantile Exchange (NYMEX). By the close of preious trading the cost of those contracts rose by $2.15 (3%) to $73.17 a barrel.
Both types of oil finished last week at their lowest level since December 2021, losing more than 11% over the week.
China’s ambassador to the United States, Qin Gang, said Monday that Beijing would continue to ease quarantine restrictions and expect to see an increase in foreign tourist arrivals in the near future. But the incidence of COVID-19 in the country continues to rise, and experts at the consulting firm FGE warned of the possibility of an unexpected tightening of restrictions by Beijing.
“Investor optimism about China’s easing of covey measures and likely increase in oil demand outweighs fears of a downturn in other parts of the world,” said Vishnu Varathan, an analyst at Mizuho Bank Ltd. in Singapore, quoted by Bloomberg.
Oil prices moved lower on Wednesday after an initial rise, with Brent approaching its lowest since the beginning of this year and WTI near its lowest since late last year.
The price of February Brent crude futures on London’s ICE Futures exchange stands at $78.78 a barrel by 1:19 p.m. Wednesday, down $0.57 (0.72%) from the previous session’s closing price. At one point in the session, Brent had fallen to its lowest level since January 3.
The price of WTI crude futures for January on the electronic trading of the New York Mercantile Exchange (NYMEX) fell by that time by $0.47 (0.63%), to $73.78 a barrel. At a certain point in trading, the price of WTI fell to its lowest level since December 2021.
The day before, oil had fallen substantially on growing fears of a downturn in the global economy and, consequently, a decline in demand for oil in 2023.
“There’s still a lot of uncertainty in the markets today,” said Rystad Energy senior vice president Claudio Galimberti.
Both Brent and WTI have lost more than 9% in the past three sessions, despite the easing of quarantine restrictions in China and the entry into force of a European embargo on Russian oil, as well as initiatives to impose a price ceiling on oil from Russia.
Oil prices are rising on Wednesday morning after having risen the previous day on expectations that China will ease anti-coke restrictions.
The price of January Brent futures, which end trading on Wednesday, on the ICE Futures Exchange in London is $83.97 a barrel by 7:17 a.m. Ksk, up $0.94 (1.13%) from the previous session’s closing price. The more actively traded February futures rose $0.93 (1.1%) to $85.18 a barrel. On Tuesday, February contracts rose $0.36 (0.4%) to $84.25 a barrel.
The price of WTI futures for January at electronic trades on the New York Mercantile Exchange (NYMEX) is $79.09 per barrel by that time, which is $0.89 (1.14%) above the final value of the previous session. The day before contract rose by $0.96 (1.2%) to $78.2 per barrel.
Chinese authorities the day before announced plans to more actively vaccinate the elderly population against coronavirus, reducing the time between vaccinations for those over 80 years to three months.
“The announcement followed unprecedented street protests and was the first signal that Beijing might consider easing draconian measures to control the spread of the coronavirus. The prospect of normalization in the world’s biggest oil importer has driven oil prices higher, the first significant recovery in two weeks,” said ActivTrades senior analyst Ricardo Evangelista.
The market’s attention is also directed towards OPEC+ meeting to be held on December 4. Eurasia Group analysts believe that the alliance may decide to reduce production quotas amid prospects of weakening demand in China.
Meanwhile, the American Petroleum Institute (API) data showed a decline of 7.85 million barrels of oil reserves in the USA last week instead of the 2.5 million barrels reduction which analysts expected.
Official data from the US Department of Energy on inventories will be released on Wednesday at 5:30 p.m. ksec.
Oil prices are rising sharply on Tuesday morning, recovering from a decline in the previous session, during which quotations reached lows of almost a year.
The cost of January Brent futures on London’s ICE Futures Exchange stands at $85.16 a barrel by 7:12 a.m. CST, up $1.97 (2.37%) from the previous session’s closing price. At the close of trading on Monday those contracts have fallen by $0.44 (0.5%) to $83.19 per barrel.
The price of WTI futures for January at electronic trades of the New York Mercantile Exchange (NYMEX) is $78.87 per barrel by that time, which is $1.53 (1.98%) above the final value of the previous session. The day before contract went down in price by $0.96 (1.3%) to $77.24 per barrel.
In trading on Monday, Brent fell to its lowest level since January and WTI dropped to its lowest point since last December, according to Dow Jones Market Data. The reason for the fall were mass protests against lockdowns, which took place over the weekend throughout China, including Beijing, Shanghai, Xinjiang and Wuhan.
Experts are concerned that unexpectedly mass protests in China, which is the world’s largest oil importer, could provoke a tough reaction from the authorities of China, notes Bloomberg.
However, then American traders returned to the market after a long weekend and oil prices have moved away from the session lows.
“The last few days have been difficult for oil due to a combination of low volumes, sluggish trading and concerns about reduced demand due to lockdowns in China,” Colin Cieszynski, senior analyst at SIA Wealth Management, wrote.
The market’s attention is now focused on the next OPEC+ meeting on December 4 and on negotiations regarding the introduction of a price ceiling on Russian oil in response to Russia’s continuation of a full-scale war against Ukraine. European Union countries again failed to reach a consensus on Monday, as some countries found the proposed price cap of $62 a barrel too high, Bloomberg reported, citing informed sources.
Oil prices are falling on Monday amid a general decline in investor appetite for risk in connection with information about the ongoing protests in China against covid restrictions.
As Bloomberg reports, protests were held in cities across the country, including the capital Beijing, as well as Shanghai, Xinjiang and Wuhan, which was originally the epicenter of the spread of COVID-19.
That contributes to a stronger U.S. dollar, which reduces the attractiveness of investing in commodities and also raises the possibility of even more significant tightening of restrictions by Chinese authorities, the agency said.
The value of January futures on Brent crude oil on London’s ICE Futures Exchange by 7:10 a.m. KSC on Monday was $81.31 per barrel, down $2.32 (2.77%) from the previous session’s close. Those contracts fell by $1.71 (2%) to $83.63 per barrel at the close of trading on Friday.
The price of WTI futures for January crude oil fell by $2.31 (3.03%) to $73.97 per barrel at electronic trading on the New York Mercantile Exchange (NYMEX). By closing of previous trades the cost of these contracts fell by $1.66 (2.1%) to $76.28 per barrel.
Brent fell 4.6% and WTI fell 4.8% at the end of last week.
“The outlook for the oil market remains unfavorable and the events of this weekend in China do not add to the positive,” said Warren Patterson, who is in charge of commodity strategy at ING Groep NV in Singapore.
According to the forecast of analytical company Kpler, oil demand in China in the fourth quarter will decrease to 15.11 million barrels per day (bpd) from 15.82 million bpd a year earlier.
