Oil prices fluctuate slightly but end the week with growth, Brent – $86.99 a barrel
Oil prices fluctuated weakly and multidirectionally in trading on Friday, but finished the week with a strong increase, thanks to signals of gradual easing of quarantine restrictions in China.
Several major Chinese cities announced the easing of quotas, which allows investors to hope for an increase in business activity and, accordingly, demand for oil in the country.
Guangzhou, Shijiazhuang and Chengdu relaxed requirements relating to the regularity of tests for COVID-19 and the movement of citizens, Bloomberg reported. Markets and public transportation began operating in some areas. In Beijing, sick people were allowed to stay at home instead of being isolated in special centers.
The cost of February futures for Brent crude oil on London’s ICE Futures exchange was $86.99 a barrel by 6:15 a.m. KSC on Friday, up $0.11 (0.13%) from the previous session’s close. Those contracts fell $0.09 (0.1%) to $86.88 a barrel at the close of trading on Thursday.
The price of WTI futures for January oil at NYMEX fell by $0.03 (0.04%) to $81.19 per barrel by that time. By closing of previous trades these contracts grew by $0.67 (0.8%) to $81.22 per barrel.
Since the beginning of this week, Brent has risen 4% and WTI more than 6%.
“We should not expect a sharp reversal of Chinese policy, but any easing of covid restrictions is welcome,” said OANDA chief analyst Craig Erlam. – The PRC’s approach to fighting the coronavirus has been devastating for the economy and the trust of citizens, and the protests have shown how public attitudes have changed.”
The focus for traders this week is the next OPEC+ meeting this weekend, and the market largely expects the organization’s states to decide to keep production levels unchanged, Bloomberg notes.
On Monday, an EU embargo on Russian oil purchases comes into effect.
In addition, according to the G7-approved plan, starting from December 5, the EU and British companies will be able to provide shipping and insurance services for transportation of Russian oil, only if it is bought at a price below a certain ceiling.
The Wall Street Journal reported Thursday, citing its sources, that the European Commission, in response to Russia’s continued war against Ukraine, proposed that the 27 EU countries approve a price ceiling on Russian oil of $60 per barrel.
Oil prices show weak negative dynamics on Thursday morning after a 3% jump a day earlier.
February futures for Brent crude oil on London’s ICE Futures Exchange fell by $0.28 (0.32%) – to $86.69 per barrel by 7:17 a.m. Kk. The previous day the price of these contracts grew by 3.2% up to $86.97 per barrel. The cost of January Brent futures, which expired on Wednesday, grew by 2.9%, reaching $85.43 per barrel.
WTI futures for January delivery on NYMEX fell by $0.22 (0.27%) to $80.33 per barrel by the same time. Those contracts rose 3% on Wednesday to $80.55 a barrel.
Meanwhile, Brent was down 9.9% in November, while WTI gained 6.9%, mostly on investors’ concerns about lower demand in China due to new lockdowns caused by coronavirus outbreak.
On Wednesday the oil market, however, was supported by the news that the authorities of the People’s Republic of China softened the anti-covids measures in a number of cities and provinces, including Beijing. Investors expect official Beijing to abandon its zero tolerance policy to the coronavirus after mass protests in the country earlier this week.
Moreover, the official data of the US Department of Energy showed a weekly drop of oil reserves by 12.58 mln barrels to 419.08 mln barrels. Meanwhile, experts expected reserves decline by only 3.12 mln barrels.
The market’s attention is gradually shifting to the OPEC+ meeting to be held on December 4. Some analysts expect that the alliance may decide on further reduction of production quotas.
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 rise on Friday, but ended the week lower by more than 2% amid growing concerns among traders about the prospects for Chinese demand.
The incidence of COVID-19 in China continues to rise, forcing authorities to introduce new quarantine measures, notes Bloomberg.
Investors continue to follow the negotiations in the European Union concerning the price ceiling for Russian oil. Recent media reports suggest that the price ceiling may be set high enough to prevent the global market from losing a significant amount of raw materials from Russia.
The value of January futures for Brent crude at London’s ICE Futures Exchange by 8:05 a.m. Moscow time on Friday was $85.74 per barrel, $0.4 (0.47%) above the previous session’s closing price. At the end of trading on Thursday those contracts have fallen by $0.07 (0.1%) down to $85.34 per barrel.
The price of WTI futures for January at electronic trades of NYMEX grew by that time by $0.58, to $78.52 per barrel. The day before, there were no major trades in the U.S. due to a holiday (Thanksgiving).
As The Wall Street Journal reported Thursday, EU countries are still discussing at what exact level the price ceiling for Russian oil should be set. Poland, Estonia and Latvia opposed the G7’s proposed price of $65-70 a barrel, believing it is too high and leaves Russia with too much revenue. At the same time, Cyprus, Greece and Malta, the countries with a developed shipping industry, on the contrary, consider this level too low.
“The introduction of a price ceiling on Russian oil at $65-70 per barrel will not have a significant impact on the market, since it is already being sold at that value,” said Kotak Securities Ltd. a commodity sector analyst. Ravinda Rao, whose opinion is cited by Bloomberg.
Oil prices are declining Monday morning after a sharp decline over the past week caused by concerns about the Chinese economy.
The cost of January futures for Brent at London’s ICE Futures Exchange stood at $86.65 a barrel by 7:06 a.m., down $0.97 (1.11%) from the close of the previous session. Those contracts fell by $2.16 (2.4%) to $87.62 per barrel at the close of trading last Friday.
The price of WTI futures for January at the electronic trading on the New York Mercantile Exchange (NYMEX) is $79.34 per barrel by that time, down $0.77 (0.96%) from the previous session. The contract fell by $1.56 (1.9%) to $80.08 per barrel at the end of last session.
Brent dropped 8.7 percent and WTI dropped 10 percent at the end of last week. Both contracts finished the trading at their lowest since the end of September.
The main negative factor for oil quotations last week was the concerns about demand for fuel, especially in China.
China’s State Council warned of the risks of “irresponsible weakening” of countermeasures against the coronavirus, the South China Morning Post reported. In the past two weeks, the number of new cases of COVID-19 infection recorded daily in China has increased sevenfold, the WSJ wrote.
Traders are also trying to estimate how much crude will leave the market after the European embargo on Russian oil went into effect Dec. 5.
“No doubt the market will keep an eye on oil supply data from OPEC+ countries in the coming weeks, as it remains unclear how much production will actually decline after the announced 2 million bpd cut,” wrote Barbara Lambrecht of Commerzbank.
Meanwhile, the number of active oil rigs in the USA last week increased by 1 unit to 623, oil services company Baker Hughes reported. The index rose for the third week in a row.
