Oil prices are down on Friday, but finished the week with a strong increase due to signals of increased demand in China.
Chinese authorities significantly raised oil import quotas for local companies, which suggests that refineries are about to increase production.
Investor optimism about the prospects for the U.S. economy provides additional support to the market, notes Bloomberg. Statistics data published the day before showed a slowdown in inflation in the U.S., which reinforced expectations of an imminent end to the cycle of base interest rate increases in the country.
The cost of March futures for Brent crude oil on London’s ICE Futures exchange was $83.67 a barrel by 7:15 a.m. on Friday, down $0.36 (0.43%) from the previous session’s closing price. Those contracts rose $1.36 (1.7%) to $84.03 a barrel at the close of trading on Thursday.
The price of WTI futures for February crude oil at electronic trades of NYMEX fell by $0.22 (0.28%) by that time to $78.17 per barrel. By closing of previous trades these contracts grew by $0.98 (1.3%) to $78.39 per barrel.
U.S. consumer prices (CPI) rose 6.5% in December from a year earlier, the Labor Department said Thursday. Thus, inflation slowed from 7.1% in November, the lowest since October 2021. Consumer prices fell 0.1% from the previous month, the first month-over-month decline since 2020.
“The inflation data show that the Fed is probably almost done with the rate hike and the U.S. economy will be able to avoid a recession,” notes OANDA chief analyst Edward Moya, quoted by Market Watch.
Oil prices are declining on Wednesday morning after reports of a record two-year increase in US inventories of the fuel last week.
The cost of March futures for Brent crude oil on London’s ICE Futures exchange fell by $0.77 (0.96%) to $79.33 a barrel by 7:10 a.m. compared to the value at the close of trading the previous day. Those contracts rose 45 cents (0.6%) to $80.10 per barrel on Tuesday.
The price of WTI futures for February at electronic trades on the New York Mercantile Exchange (NYMEX) is $74.34 a barrel by that time, down $0.78 (1.04%) from the previous session. The contract rose by 49 cents (0.7 percent) to $75.12 a barrel at the end of last session.
Previous day’s report of American Petroleum Institute (API) showed that U.S. inventories climbed by 14.9 million barrels on January 6, following a decline over the past two weeks. The increase was the highest since February 2021.
Traders are now waiting for official data to be released by the Energy Department on Wednesday at 5:30 p.m. Analysts polled by Trading Economics predict that the Energy Department data will point to a 2.24 million-barrel decline in oil reserves. The survey was conducted before the API data was released.
The day before the oil market was supported by expectations of growth in demand for fuel in China as the last restrictions were canceled. At the same time, investors are concerned about the growing number of infections of coronavirus in the country.
“We are confident that oil prices will go back up after the peak of COVID-19 infection in China has passed and economic activity is accelerating,” said Carsten Fritsch, a commodity market analyst at Commerzbank.
The price of March futures on London’s ICE Futures exchange fell by $0.77 (0.96%) to $79.33 per barrel by 7:10 a.m. from the close of trading the day before. Those contracts rose 45 cents (0.6%) to $80.10 per barrel on Tuesday.
The price of WTI futures for February at electronic trades on the New York Mercantile Exchange (NYMEX) is $74.34 per barrel by that time, down $0.78 (1.04%) from the previous session. The contract rose by 49 cents (0.7 percent) to $75.12 a barrel at the end of last session.
Previous day’s report of American Petroleum Institute (API) showed that U.S. inventories climbed by 14.9 mln barrels on January 6 following a decline the previous two weeks. The increase was the highest since February 2021.
Traders are now waiting for official data to be released by the Energy Department on Wednesday at 5:30 p.m. Analysts polled by Trading Economics predict that the Energy Department data will point to a 2.24 million-barrel decline in oil reserves. The survey was conducted before the API data was released.
The day before the oil market was supported by expectations of growth in demand for fuel in China as the last restrictions were canceled. At the same time, investors are concerned about the growing number of infections of coronavirus in the country.
“We are confident that oil prices will go back up after the peak of COVID-19 disease in China and the acceleration of economic activity,” – said a commodity market analyst at Commerzbank Karsten Fritsch.
Oil prices are declining in trading on Tuesday after a strong rise in the previous session.
The cost of March futures on London’s ICE Futures Exchange for Brent is $79.16 a barrel by 7:08 a.m. (EET) on Tuesday, down $0.49 (0.62%) from the close of the previous session. At the close of trading on Monday those contracts grew by $1.08 (1.37%) to $79.65 a barrel.
The price of WTI futures for February crude oil at electronic trades of NYMEX fell by that time by $0.40 (0.54%) to $74.23 per barrel. By closing of previous trades the cost of these contracts grew by $0.86 (1.17%) to $74.63 per barrel.
Brent has fallen by 8.5% and WTI by 8.1% at the end of the previous week.
Pressure on the oil market was put by “hawkish” statements by representatives of the U.S. Federal Reserve (Fed), Trading Economics wrote. Mary Daley, head of the Federal Reserve Bank (FRB) of San Francisco, said she thinks the U.S. central bank will have to raise the rate above 5% to fight inflation.
“I think a level above 5 percent is absolutely likely,” she told The Wall Street Journal.
Her counterpart at the Atlanta Fed, Rafael Bostic, also reiterated an earlier view that the rate would be raised to more than 5 percent. Currently, its range is 4.25-4.5%.
Investors are also cautious ahead of the Lunar New Year, fearing that increased travel by Chinese citizens could lead to an increase in the incidence of coronavirus worldwide, Trading Economics noted.
Oil quotations grew steadily on Friday amid publication of data on energy reserves in the U.S., which showed a decline of gasoline and distillate reserves in the country last week.
The value of March futures on Brent crude oil on London’s ICE Futures Exchange was $79.50 per barrel by 7:05 a.m. KSC on Friday. It was $0.81 (1.03%) above the previous session’s close price. At the end of trading on Thursday those contracts grew by $0.85 (1.09%) up to $78.69 per barrel.
The price of WTI futures for February at electronic trades of NYMEX grew by that time by $0.79, to $74.46 per barrel. By closing of previous trades the cost of those contracts grew by $0.83 (1.14%) to $73.67 per barrel.
Commercial oil inventories in the U.S. rose 1.69 million barrels to 420.65 million barrels last week, according to a weekly report from the nation’s Energy Department.
Commercial gasoline inventories fell by 346,000 barrels to 222.66 million barrels.
Commercial distillate stocks decreased by 1.43 million barrels to 118.78 million barrels.
Experts were expecting a 1.5 mln barrel increase of oil reserves, a 1 mln barrel decrease of gasoline reserves and a 1.17 mln barrel decrease of distillate reserves.
Since the beginning of the week oil prices fell by about 7% due to an increase in COVID-19 disease in China, which clouds the short-term outlook for oil demand in that country.
In turn, hawkish signals from the U.S. Federal Reserve (Fed) on the future direction of monetary policy are increasing concerns about a potential recession, writes Trading Economics.
Oil prices are rising on Thursday after a significant drop in the previous two sessions amid concerns about the prospects of demand.
The cost of March futures on Brent crude at London’s ICE Futures Exchange is $78.75 per barrel by 7:10 a.m. KSC on Thursday, which is $0.91 (1.17%) above the closing price of the previous session. Those contracts fell by $4.26 (5.2%) to $77.84 a barrel at the close of trading on Wednesday.
The price of WTI futures for February at electronic trades of NYMEX grew by that time by $0.87 (1.19%) up to $73.71 per barrel. By the close of previous trading the cost of those contracts fell by $4.09 (5.3%) to $72.84 a barrel.
Oil prices fell by about 9% during the last two sessions due to an increase in COVID-19 in China, which clouds short-term oil demand prospects in that country.
In addition, fears of energy shortages in the global market during the winter, which supported prices in recent months, weakened, given the milder-than-expected winter weather in the U.S. and Europe, notes Bloomberg.
The focus of traders on Thursday is the report on energy stocks in the U.S., which will be released by the U.S. Department of Energy at 18:00 ksec.
The American Petroleum Institute (API) data published a day before showed a 3.3 mln barrels increase of US reserves for the week ended December 30.
Oil prices continue to decline on Wednesday after falling by more than 4% in the previous session.
Pressure on the market continues to have traders doubts about the prospects for demand for oil in China, where there remains a high incidence of COVID-19 after the removal of most of the quarantine restrictions.
“We believe that demand for commodities in China will remain weak in the first quarter of the beginning of the year, given the ongoing recession in real estate, a new wave of COVID-19 disease and weak export demand,” notes Capital Economics analyst Caroline Bain.
Meanwhile, fears of energy shortages in the global market during winter, which supported prices in recent months, are weakening, given the milder-than-expected winter weather in the U.S. and Europe, notes Bloomberg.
March Brent crude futures on the London-based ICE Futures exchange were at $81.93 a barrel by 7:10 a.m. Wednesday, down $0.17 (0.21%) from the previous session’s closing price. Those contracts fell $3.81 (4.4%) to $82.1 a barrel at the close of trading on Tuesday.
The price of WTI futures for February at electronic trades of NYMEX fell by that time by $0.27 (0.35%) to $76.66 per barrel. By the close of previous trading the cost of those contracts fell by $3.33 (4.2%) to $76.93 a barrel.
At the end of 2022 Brent has risen by 10.5%, WTI – by 6.7%.
