The price of a barrel of oil rose globally during trading today, Wednesday, January 25 (2023), amid hopes for increased demand.
This comes amid optimism about the recovery of demand in China, the largest oil importer in the world, and expectations that the main producers will maintain the current production policy, which offset fears of a global recession.
The global price of a barrel of oil today
By 08:02 a.m. GMT (11:02 a.m. Mecca time), the prices of benchmark Brent crude futures – for delivery in March 2023 – rose by 0.27%, to $86.36 a barrel.
The price of US West Texas crude futures – delivery in March 2023 – increased by 0.22%, to $80.31 a barrel, according to data viewed by the specialized energy platform.
And oil prices ended their dealings, yesterday, Tuesday, January 24, with a decrease of more than 2%, amid fears of a slowdown in the US economy.
demand for oil
“Expectations that Chinese fuel demand will recover in the second half of the year is increasing, and is likely to support market sentiment,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Analysts from Bank of America Securities said that the reopening of the Chinese economy after years of strict restrictions related to the Corona virus could unleash a large wave of pent-up demand over the next 18 months.
On the supply side, volumes should remain steady over the medium term, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, in the alliance known as OPEC+, are expected to keep their production policy unchanged.
OPEC+ meeting
5 sources in OPEC + said, yesterday, Tuesday, that the OPEC + committee is likely to endorse the current oil production policy for the group of producers when it meets next week, as hopes for an increase in Chinese demand balance with concerns about inflation and the global economy, according to Reuters.
And OPEC + decided in October to reduce production by two million barrels per day from November until the end of December 2023, in light of expectations of a decline in global economic growth.
US oil stocks
However, the gains in the price of a barrel of oil globally were capped by a larger-than-expected build in US oil inventories reported after the market stabilized on Tuesday.
US crude inventories rose by about 3.4 million barrels in the week ending January 20, according to market sources, citing figures from the American Petroleum Institute.
That’s three times the forecast of about 1 million in a preliminary Reuters poll on Monday.
However, Kikukawa expects the build to be “temporary, as the supply outage from the cold wave in the US a few weeks ago will only affect the data for the next two weeks.”
Official data from the US Energy Information Administration will be released later on Wednesday.
Kikukawa expects WTI to trade in a range of $75-85 per barrel in the coming weeks.
interest rates
The markets are also watching interest rate decisions from central banks for more trading signals.
“It seems that the absence of the Fed’s hawkish comments on the current blackout period has removed a major drag on risk sentiment for the time being, providing some renewed impetus to growth,” said IG Market Analyst, Yip Jun Rong.
The analyst added that investors are waiting to see if the US Federal Reserve will “react to the recent surprise drop in inflation and growth” when it meets next week.
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