Oil prices are rising Thursday morning, recovering from a moderate decline the day before, triggered by data on a sharp increase in U.S. oil inventories last week.
The price of April futures on London’s ICE Futures Exchange stood at $85.85 per barrel by 7:05 a.m., $0.47 (0.55%) above the previous session’s closing price. Those contracts fell by $0.2 (0.2%) to $85.38 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 $79.16 per barrel by that time, which is $0.57 (0.73%) above the final value of the previous session. The previous day the contract fell by $0.47 (0.6%) to $78.59 per barrel.
According to the report of U.S. Department of Energy published on Wednesday, oil reserves in the country last week jumped by 16.28 million barrels. Gasoline inventories declined by 2.32 million barrels and distillates by 1.28 million barrels.
Experts expected an increase of oil reserves by 2 million barrels, gasoline reserves by 1.5 million barrels and distillates by 1 million barrels.
At the same time, the Energy Department explained that the data on oil reserves includes an upward adjustment of 1.967 million barrels per day, or about 14 million barrels for the whole week.
Matt Smith, a senior analyst at Kpler, told MarketWatch that the adjustment “was the result of previous underestimation of imports and/or production and overestimation of exports and/or refinery capacity.”
Meanwhile, the International Energy Agency (IEA) raised its forecast for oil demand growth in 2023 by 94,000 bpd, according to its monthly report.
Thus, analysts have increased the estimate of demand in 2022 compared to the previous report by 107 thousand b / s – up to 99.96 million b / s, and the forecast for 2023 increased by 202 thousand b / s – to a record 101.92 million b / s. Thus, the IEA expects global oil demand to increase by 1.96 mln bpd this year compared to 1.87 mln bpd a month earlier.
Benchmark crude oil prices are falling on Wednesday morning, continuing to react negatively to reports on the sale of oil from the US strategic reserve.
April Brent futures on London’s ICE Futures exchange stood at $84.8 a barrel by 7:08 a.m., down $0.78 (0.91%) from the previous session’s close. Those contracts fell $1.03 (1.2%) to $85.58 a barrel at the close of trading on Tuesday.
The price of WTI futures for March at electronic trades on the New York Mercantile Exchange (NYMEX) is $78.31 per barrel by that time, down $0.75 (0.95%) from the previous session. The day before the contract dropped $1.08 (1.4%) to $79.09 per barrel.
The day before the US Department of Energy announced about its plans to sell 26 mln barrels of oil from strategic reserve (SPR) on the market this year. Sales will be carried out within the period from April 1 to June 30.
The fuel release from the reserves will come as part of agreements reached back in 2015 and is related to the execution of the state budget, Sevens Report Research editor Tyler Ritchie told MarketWatch.
“But when traders see a news headline on the screen about releasing oil from the strategic reserve, the first thing they think of is an increase in supply in the market, then they hit the ‘sell’ button first and only then ask questions,” he added.
Meanwhile, OPEC the day before raised its estimate of the demand for oil in 2023 by 100 thousand barrels per day – up to 101.87 million bpd. Oil consumption growth in OECD countries is expected to be 0.35 million bpd in 2023 and 1.96 million bpd in non-OECD countries.
The estimate of oil demand in the first quarter of 2023 is increased by 220,000 bpd from the previous forecast, to 101.26 million bpd; in the second quarter, it is increased by 50,000 bpd, to 100.7 million bpd. The forecast for the third quarter was increased by 90,000 bpd to 101.99 million bpd.
In addition, American Petroleum Institute (API) data released on Tuesday night, Wednesday, indicated a 10.5 million barrel increase in U.S. inventories for the week ended February 10.
The official report on U.S. energy reserves will be released Wednesday at 5:30 p.m. Analysts polled by Trading Economics expect the average increase in oil reserves by about 1.2 million barrels.
Oil prices are falling on Tuesday on a report by Bloomberg that the U.S. plans to sell additional amounts of crude oil from its Strategic Petroleum Reserve (SPR).
According to the agency, the USA intends to sell 26 million barrels of oil from SPR in the period from April to June this year.
April Brent crude futures on London’s ICE Futures exchange stood at $86.01 a barrel by 7:10 a.m. Tuesday, down $0.6 (0.69%) from the previous session’s closing price. Those contracts rose $0.22 (0.3%) to $86.61 a barrel on Monday.
The price of WTI futures for March crude oil at electronic trades of NYMEX fell by $0.87, to $79.27 per barrel by that time. At the end of previous session the contracts value grew by $0.42 (0.5%) up to $80.14 per barrel.
The previous day the oil market grew due to signals of an increase in business activity in China, while Russia announced a cut in its production. Russian Deputy Prime Minister Alexander Novak told reporters on Friday that the country intended to reduce oil production by 500,000 bpd in March.
Traders’ attention on Tuesday will be focused on U.S. inflation data for January, which will allow investors to make new forecasts about future Federal Reserve policy and the prospects of the American economy, Market Watch notes.
Oil prices are down on Friday, but finished the week in the plus.
The price of April futures on London’s ICE Futures Exchange for Brent was $84.32 a barrel by 7:15 a.m. on Friday, down $0.18 (0.21%) from the previous session’s close. Those contracts fell $0.59 (0.7%) to $84.5 a barrel at the close of trading on Thursday.
The price of WTI futures for March crude oil at NYMEX fell by $0.29 (0.37%) to $77.77 per barrel by that time. By the close of previous trading the cost of those contracts declined by $0.41 (0.5%) to $78.06 a barrel.
Both Brent and WTI gained more than 5% YoY on optimism about prospects for Chinese demand, which rose after Saudi Arabia raised March prices for its main oil grade supplied to Asia.
At the same time, traders fear that the protracted tightening of monetary policy in the U.S. could weaken the country’s economy and, consequently, fuel consumption.
Earlier this week, several U.S. Central Bank executives made it clear that they believe it is necessary to continue raising the U.S. benchmark interest rate because the fight against high inflation is not over.
“Oil will continue to rise in price if fears of a downturn in the economy subside,” said CITIC Futures Co. Gui Chenxi, cited by Bloomberg. – The market is hoping for higher energy demand as we see mobility growth in China, as well as in the U.S. and Europe.
Benchmark crude oil is moderately expensive Wednesday morning after rising to weekly peaks the day before, driven by hopes for a recovery in demand in China and fears of supply disruptions due to an earthquake in Turkey.
The price of April futures for Brent on London’s ICE Futures Exchange stood at $83.78 a barrel by 7:20 a.m., $0.09 (0.11%) higher than at the close of the previous session. Those contracts rose by $2.7 (3.3%) to $83.69 a barrel at the close of trading on Tuesday.
The price of WTI futures for March at electronic trades of the New York Mercantile Exchange (NYMEX) is $77.35 per barrel by that time, which is $0.21 (0.27%) above the final value of the previous session. The contract rose by $3.03 (4.1%) to $77.14 a barrel, the highest since January 31.
As earlier reported, the work of Turkish Ceyhan oil terminal was suspended after the earthquake that killed over 7,000 people in Turkey and Syria.
In addition, the market continues to assess the words of the head of the International Energy Agency (IEA) Fatih Birol that China’s economic recovery may proceed at a faster pace than expected, which in turn will lead to a global increase in demand for oil and LNG.
Meanwhile, American Petroleum Institute (API) data released on Tuesday night showed a 2.18 million barrel decline in U.S. inventories for the week ended February 3.
The official report on U.S. energy reserves will be released Wednesday at 5:30 p.m. Analysts polled by Trading Economics expect an average increase of about 2.5 million barrels of oil reserves.
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.
