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 declining Monday morning after a significant rebound last week, driven by optimism over the impact of the lifting of coronavirus restrictions in China on fuel demand in the country and the world.
The value of March futures for Brent at London’s ICE Futures Exchange stood at $84.66 a barrel by 7:10 a.m. Kk, down $0.62 (0.73%) from the close of the previous session. At the close of trading last Friday those contracts grew by $1.25 (1.5%) to $85.28 per barrel.
The price of WTI futures for February at electronic trades of the New York Mercantile Exchange (NYMEX) is $79.35 per barrel by that time, which is $0.51 (0.64%) lower than the final value of the previous session. The contract rose by $1.47 (1.9%) to $79.86 per barrel at the end of last session.
Brent gained 8.3% and WTI gained 8.5%. Both contracts ended trading at the highest levels since the beginning of the year.
The opening of the Chinese economy “was the most important factor behind the growth in oil prices last week”, and data on declining inflation in the U.S. also added to investors’ optimism about the American economy, the president of Strategic Energy & Economic Research Michael Lynch said.
In addition, prices were supported by the weakening of the dollar, the expert added.
This week, traders’ attention will focus on the monthly reports of OPEC and the International Energy Agency, which will be released on Tuesday and Wednesday, respectively, Trading Econimics noted.
Meanwhile, the number of active oil rigs in the U.S. rose by five last week to 623, oil services company Baker Hughes said. The number of gas rigs dropped by two, to 150.
Oil prices are stable in trading on Thursday after a strong growth in the previous session, despite an unexpected increase in inventories in the USA.
The market is supported by the growing optimism of traders about the prospects for fuel demand in China. As noted by Bloomberg, Chinese companies are actively buying oil before the long holiday on the occasion of the Lunar New Year, which this time comes at the end of January.
“Investors are more focused on the global demand picture than energy stock data,” notes Tortoise portfolio manager Brian Kessens. – The focus is on China, which is likely to be the main driver of oil consumption growth in the first quarter.”
The cost of March futures on Brent on London stock exchange ICE Futures is $82,7 per barrel by 7:10 a.m. KSC on Thursday which is by $0,03 (0,04%) higher than the price on previous session closing. At the close of trading on Wednesday those contracts rose by $2.57 (3.2%) to $82.67 a barrel.
The price of WTI futures for February increased by $0.02 (0.03%) up to $77.43 per barrel at electronic trades of NYMEX. By the close of previous trading the cost of those contracts rose by $2.29 (3.1%) to $77.41 a barrel.
U.S. commercial oil inventories rose 18.96 million barrels to 439.61 million barrels last week, the Energy Department said Wednesday. Experts polled by Bloomberg agency expected on average a decrease of 2 million barrels, respondents of S&P Global Commodity Insights – by 500,000 barrels.
The increase in oil inventories is probably due to a temporary reduction in production by U.S. refineries at the end of last month due to frost, notes Market Watch. The current inventory level is about 1% higher than the five-year average.
Oil prices rise on Monday after a significant decline in the past week.
The price of March futures for Brent oil on the London ICE Futures exchange by 7:10 qoq on Monday is $79.45 per barrel, which is $0.88 (1.12%) higher than the closing price of the previous session. As a result of trading on Friday, these contracts fell by $0.12 (0.2%) to $78.57 per barrel.
The price of futures for WTI oil for February in electronic trading on the New York Mercantile Exchange (NYMEX) increased by this time by $0.89 (1.21%), to $74.66 per barrel. By the close of previous trading, the cost of these contracts increased by $0.1 (0.1%) to $73.77 per barrel.
As a result of the past week, Brent fell by 8.5%, WTI – by 8.1%.
Traders are evaluating the prospects for oil demand in China, where the incidence of COVID-19 has increased since the lifting of quarantine restrictions. In addition, fears of a downturn in the global economy remain in the context of the ongoing tightening of monetary policy by the world’s largest central banks.
Pressure on the oil market last week was exerted by the strengthening of the US dollar, lower natural gas prices, as well as the risks of a recession in the world, said Troy Vincent, chief analyst at DTN.
“Warm weather and falling gas prices dampen expectations that consumers will switch from gas to oil this winter,” Market Watch quoted Vincent as saying. “The increase in economic activity in China following the lifting of anti-COVID restrictions is the main factor that could push oil demand to growth. However, there remains serious uncertainty about the timing of the return of the PRC economy to normal activity.”
Ukrainian UPG Group has entered into an agreement to acquire assets of Polish company Baltchem SA Zakłady Chemiczn, as a result the network has got at its disposal a powerful marine terminal in Poland for transshipment and storage of oil products.
According to the group’s statement on its website, this will enable uninterrupted fuel supplies to Ukraine at affordable prices.
It is emphasized that all fuels sold by UPG come from Europe and comply with the fifth environmental standard.
“Adapting our business to today’s challenges, we have established reliable and stable partnership relations with such European producers of high-quality oil products as Royal Dutch Shell, Total Energies SE, Neste Oyj, Glencore Energy in the shortest time,” the statement says.
As UPG notes, from the first days of the large-scale war in Ukraine, the group terminated its partnership with the Belarusian fuel producer, completely abandoning their products, and does not supply Russian fuel since the beginning of the aggression of the Russian Federation in 2014: the annexation of Crimea and the occupation of certain territories of Donetsk and Luhansk regions.
The UPG brand belongs to the fuel company Ukrpaletsystem (Korosten, Zhytomyr Region), which has been operating on the market since 2003.
