Oil prices are virtually unchanged on Wednesday morning after rising the day before.
The price of February futures for Brent on London’s ICE Futures Exchange at 8:05 a.m. Moscow time is $79.94 per barrel, which is $0.05 (0.06%) lower than at the close of the previous session. Those contracts rose by 19 cents (0.2%) to $79.99 a barrel at the close of trading on Tuesday.
The price of WTI futures for February at electronic trades on the New York Mercantile Exchange (NYMEX) is $76.17 per barrel by that time, which is $0.06 (0.08%) below the final value of the previous session. The contract rose by $0.85 (1.1%) to $76.23 per barrel at the end of last session.
The previous day oil quotations were supported by decline of the US dollar rate, which increased the attractiveness of oil as an object for investments of holders of other currencies.
In addition, investors are following the situation with the coronavirus in China. The removal of quarantine restrictions and government stimulus measures are believed to be positive factors for fuel demand in the long term. At the same time, rising COVID-19 infections are dampening the market’s optimism, MarketWatch notes.
“After a long period of liquidating long positions, the market has become more balanced, and a bullish mood is gradually returning to oil traders,” SPI Asset Management managing director Stephen Innes wrote. – Despite all concerns about the recession in the economy, there are still those who want to buy oil after a decrease in its quotations. This demonstrates that oil is one of the most needed commodities in the world.
At the same time, reduced liquidity in the market, which is traditionally observed at the end of the year, puts pressure on quotations, the expert added.
The ninth package of EU sanctions against Russia adopted on Friday allows Bulgaria, Hungary and Slovakia, which received a reprieve from the European Union’s oil embargo on Russian oil, to export oil products produced from it to Ukraine.
The EU Council resolution published in the EU Official Journal on December 16 says the decision “allows Hungary, Slovakia and Bulgaria to export to Ukraine certain refined products derived from Russian crude oil imported on the basis of the considered derogations (from the embargo – IF), including, if necessary, by transit through other member states.”
Another paragraph of the ruling allows Bulgaria to “export to third countries certain petroleum products derived from Russian crude oil imported on the basis of the derogations under consideration.
The publication attributes this to the need to “reduce environmental and safety risks, as such products cannot be safely stored in Bulgaria.
The document specifies that the respective annual exports should not exceed the average annual volume of exports of such products for the last five years.
The cost of February futures for Brent at London’s ICE Futures Exchange is $82.09 per barrel by 7:20 a.m. (KSC), down $0.61 (0.74%) from the close of the previous session. At the close of trading on Wednesday these contracts rose by $2.02 (2.6%) to $82.7 a barrel.
The price of WTI futures for January at electronic trades of the New York Mercantile Exchange (NYMEX) makes $76.52 per barrel by that time, which is $0.76 (0.98%) lower than the final value of the previous session. The contract rose by $1.89 (2.5%) to $77.28 per barrel at the end of last session.
On Wednesday, the International Energy Agency raised its estimate for oil demand growth in 2022 by 140,000 barrels per day (bpd) to 2.3 million bpd. The 2023 demand growth forecast was also raised by 100k bpd to 1.7 million bpd. This gave a boost to the market, writes Bloomberg.
The agency also noted that oil demand remains relatively robust, especially in non-OECD countries.
Meanwhile, the Federal Reserve expectedly raised interest rates by 50 basis points to 4.25-4.5% per year. Meanwhile, the U.S. central bank said in a statement that it plans to keep raising rates so that monetary policy becomes restrictive enough to return inflation to the 2% target. Investors are concerned that tight monetary policy could cause an economic slowdown and, as a result, a drop in demand for oil.
U.S. oil inventories rose 10.23 million barrels to 424.13 million barrels last week, according to a weekly report from the U.S. Energy Department. Experts polled by Bloomberg expected a 3.5 million barrel drop in oil reserves.
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 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 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.
