The price of a barrel of oil rose globally at the end of trading today, Tuesday, January 10 (2023), after a volatile session, as hopes of increased demand from China overshadowed fears of an economic recession.
This comes with expectations that further increases in interest rates in the United States (the world’s largest oil consumer) will slow economic growth and reduce fuel demand.
The US Energy Information Administration raised expectations for global oil demand growth to 1.05 million barrels per day in 2023, compared to one million barrels per day in previous estimates.
The global price of a barrel of oil today
At the close of trading, the prices of Brent crude futures contracts – for delivery in March 2023 – rose by 0.6%, to $80.10 a barrel.
The price of US West Texas crude futures – for February delivery 2023 – increased by 0.7%, to $ 75.12 a barrel, according to data viewed by the specialized energy platform.
And crude oil prices ended their dealings, yesterday, Monday, January 9, 2023, with an increase of more than 1%, to continue to rise for the third consecutive session, amid hopes for a recovery in demand.
US interest rates
This week, two US Federal Reserve officials predicted that the Fed’s interest rate – now from 4.25% to 4.5% – would need to rise to a range of 5% to 5.25% to control rising inflation.
“The forecast is more aggressive than what markets are currently pricing in (range 4.75-5%),” said market analyst at IG, Yip Jun Rong.
Federal Reserve policymakers said new inflation data released later this week will help them determine whether they can slow the pace of interest rate hikes at their next meeting, to just a quarter-point increase rather than the larger jumps they used for most of 2022. .
dollar price
Analyst from BiviM Oil Brokerage, Tamas Varga, said that Thursday’s data could easily clarify the direction of the financial and oil markets for the coming weeks.
He added that the dollar would decline if inflation came in below expectations or was lower than November’s reading, Reuters reported.
A weaker dollar could increase demand for oil, as commodities denominated in the US currency become cheaper for holders of other currencies.
demand in China
China issued a second batch of crude import quotas for 2023, according to sources and documents seen by Reuters on Monday, raising the total for this year by 20% from the same period last year.
However, analysts warned that the revival of demand in China may play a limited role in raising the price of a barrel of oil globally, under the pressure of the global economic downturn.
“The social vitality of China’s major cities is recovering rapidly, and the resumption of Chinese demand is worth looking forward to,” said analysts from Haitong Futures.
“However, given that the consumption recovery is still in the expected stage, the global oil price per barrel is likely to remain low,” he added.
US oil stocks
A Reuters preliminary poll showed, on Monday, that US crude oil inventories probably decreased by 2.4 million barrels, with a slight decrease in distillate stocks.
Industry group American Petroleum Institute is scheduled to release data on US crude inventories at 08:30 PM GMT (11:30 PM Mecca) on Tuesday.
The Energy Information Administration, the statistical arm of the US Department of Energy, will release its official figures at 02:30 PM GMT (05:30 PM Mecca time) tomorrow, Wednesday.
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