Oil prices steady after US stockpile swell.
On Thursday, oil prices remained steady despite optimism about recovering Chinese demand being offset by U.S. crude inventories reaching their highest level in months and indications that the U.S. Federal Reserve could continue raising interest rates.
Brent crude oil futures rose 30 cents per barrel to $85.39 a barrel by 0856 GMT. U.S. West Texas Intermediate crude crude futures rose 26 cents per barrel to $78.73 a barrel. Both benchmarks have gained approximately 7% this week.
Tamas Varga, a PVM analyst, stated that “relentlessly rising U.S. Commercial inventories and potentially entrenched inflation limit any immediate upside potential.”
He stated that rising Chinese demand and falling inflation would support oil prices during the second half.
The Energy Information Administration reported that crude oil stocks in the United States increased last week to their highest level since June 2021. This was due to higher production.
Last week, U.S. gasoline inventories and distillate inventories rose as well. Continue reading
Officials at the U.S. Federal Reserve said that more interest rate increases are possible as the bank continues to try and cool inflation. This sends bearish signals across risk assets such as oil and equities.
Oil prices steady after U.S. stockpile swell https://t.co/rwctYvW63b
— Reuters Energy and Commodities (@ReutersCommods) February 9, 2023
However, the possibility of stronger demand from China helped to support oil prices as China ended three years of strict zero-COVID policies and became the second largest oil consumer in the world.
Analysts from ANZ bank stated in a note that they expect Chinese oil consumption will rise by approximately 1.0 million barrels per day this year. Strong growth could emerge as early as Q1.”
“Overall, this should drive global demand up to 2.1 million barrels per day in 2023.”
After a huge earthquake in Turkey and Syria on Monday morning, BP Azerbaijan declared force majeure to Azeri crude shipments through the Turkish port Ceyhan.
Brent’s front-month loading contract rose by $3 per barrel over six-month contracts, a market structure known backwardation. This indicates that traders are seeing tight current supply.